The Best Collection Agency Services of 2020
Updated: March 24, 2020
Collections Agency Comparisons
Update: This page was updated with information on how the coronavirus is impacting the debt collection industry.
The longer you wait to recover debt on delinquent accounts, the less likely you are to receive payment. Since it can be difficult to collect money on accounts that refuse to pay, many small businesses turn to collection agencies for help. Collection agencies differ based on industry type, locations served, collection type (consumer or commercial) and collection strategies. Some agencies also offer helpful features like online portals, skip tracing and litigation to fit various needs. To help you choose the right collection agency for your business, we created a list of the best collection agencies of 2020.
Editor's note: Looking for a collection agency for your business? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have one of our vendor partners contact you about your needs.
Collection agencies, not to be confused with debt buyers, are most commonly paid a percentage of any outstanding funds they recover on your accounts, but they don't own the debt. When they collect a payment, they hand the money over to you, minus a certain percentage in fees. A standard collection agency offers services such as formal demand letters, phone calls and emails; the top debt collection agencies provide additional services, like skip tracing, litigation and online portal access.
When comparing collection agencies, it is important to analyze more than just the services they offer. An agency's reputation for how it treats your debtors is equally important, since it will be representing your business. There are strict laws surrounding collection efforts. Any reputable agency will follow those laws and treat your debtors with dignity and respect.
When to Hire a Collection Agency
When it comes to collecting outstanding debt, generally, the more time that passes, the lower chance you have of recouping the money. Most companies send past-due accounts to a collection agency when they are 90 to 120 days past due. If you wait longer than 120 days, you are far less likely to ever recover the debt.
These are some signs it's time to start thinking about hiring a reputable collection agency:
- New customers do not respond to your first attempt to collect the debt. When you do not have a payment history with the customer, there's a greater chance they will refuse to pay.
- You've agreed to a payment plan, but the customer doesn't follow through. Customers who still won't pay after you've both worked out a payment plan are unlikely to pay what they owe you.
- A customer completely denies responsibility for the debt. Unless you enlist the help of a collection agency, these debts are rarely recovered.
- The customer makes unfounded complaints about your business, product or service. Most of the time, these complaints are just an excuse to get out of paying the debt.
- The customer has a history of financial irresponsibility.
If you have a delinquent account that matches any of these descriptions, you can take certain steps before hiring a collection agency. First, reach out to your debtor multiple times, in a polite but firm manner. If phone calls and emails don't work, send a formal demand for payment. This letter details the payment that needs to be met and is often required if you eventually file suit against the debtor.
If you have exhausted all of your options and aren't getting anywhere with a delinquent customer on your own, further attempts to collect the debt are better left to a professional agency that knows the appropriate way to collect debts while adhering to the Fair Debt Collection Practices Act. The agency may recover at least a portion of what you're owed, if not all of it.
Choosing a Collection Agency
There are more than 4,000 collection agencies in the United States alone. Some handle consumer debt collection (B2C), while others specialize in commercial debt collection (B2B). Each collection type is investigated differently; however, many agencies handle both.
1. Determine if it fits your needs.
Not all agencies will fit your specific business needs; it is important to carefully assess which agencies will. Some agencies cater to businesses of certain sizes (e.g., small businesses or enterprises), while some focus on a specific region (local, national or international). Beyond basic collection efforts, some agencies provide additional services, such as billing, precollections, credit reporting and account receivables consulting. You should identify if an agency is well suited for your business and provides all the services you need.
2. Determine if it specializes in your industry.
Some collection agencies, primarily consumer agencies, specialize in certain industries, such as healthcare, insurance, utilities, credit cards, mortgages or auto loans, while others service a wide range of industries. If you provide a product or service within a very specific industry, the experience a collection agency has in that industry can be the tiebreaker between two reputable collection agencies you are considering.
It is important to hire an agency with an established track record of successful collections in your industry. The agency should be familiar with the terminology in your industry and with state and federal rules and regulations governing your industry, if applicable. If you're in the healthcare field, for example, the collection agency you hire must be well versed in insurance requirements, medical terms and important laws like HIPAA.
3. Find a reputable agency.
Here are some tips to help you pinpoint a reputable, effective agency:
Ask for referrals from your attorney, accountant or trusted business associates in your industry. Go beyond just asking for agency names; find out why the person recommends that particular agency. Does it have a high success rate? Is it known for its strict adherence to laws?
Search the directory of the Association of Credit and Collection Professionals (ACA International) to find a member agency licensed in your city or state. ACA International is a nonprofit that establishes ethical standards for the industry and requires its members to adhere to them.
Check the Better Business Bureau for ratings on the collection agency you are considering. One or two complaints could be a fluke; many complaints are a red flag.
Make sure the company is state licensed and/or bonded, if applicable. Many states require one or both.
Find out where the agency is licensed. If you only do business locally, an agency that is licensed only in your state is fine. If you have customers across the U.S., find an agency licensed in all applicable states.
Determine whether the company is insured. Errors and omissions (E&O) liability insurance is one sign of a reputable agency. E&O insurance provides coverage for consumer claims of improper conduct, such as harassment. In many cases, that coverage extends to your business. While E&O insurance is not required by federal or state laws, it's a sign of good faith.
Visit the collection agency. Before you commit, sit down with the collection agency to learn more about it. You can learn a lot about how trustworthy agencies are by talking to them and asking how they handle delinquent accounts. Ask to see proof of results: What percentage of debts have they successfully collected? Find out which tactics and technologies the agency uses in its collection efforts. Ask for references and check them. If the company doesn't seem like a good fit, trust your instincts and move on.
Don't worry too much about size. A large, national firm is not necessarily a better fit than a small, local one. It depends on your needs, the agency's strengths, its reputation and its track record.
- Look for properly trained collectors. Agents should be experienced and skilled negotiators. Find out if the collection agency's employees receive regular education and training. Courses are available through ACA and other membership organizations. If possible, arrange to listen in on a few calls before committing to a collection agency.
Fair Debt Collection Practices Act
When you're choosing a collection agency, integrity and reputation are among the most important considerations. A company that uses dubious methods to collect debt damages your reputation too, costing you current and future customers. In worst-case scenarios, your company could face litigation for a collection agency's illegal practices, even if you were not aware of its actions.
All consumer collection agencies are required to comply with a federal law regulating the industry, known as the Fair Debt Collection Practices Act. It's important for you to know the law so you can hire a collection agency that abides by its precepts and avoids FDCPA violations.
Under FDCPA, collection agencies ...
- Cannot call debtors before 8 a.m. or after 9 p.m., unless the debtor has agreed to it beforehand
- Cannot call at inconvenient places. For example, if the debtor has requested to not receive calls at work, collectors can no longer call a debtor's employer.
- Must honor letters requesting that contact concerning a debt cease.
- Must contact a debtor's attorney if the debtor has one.
- Cannot contact third parties (including family and friends) more than once. It can only contact the third party to find a way to contact the debtor, and it can't state that the consumer owes debt.
- Must send the debtor validation and verification of debt.
- Cannot threaten harm or violence.
- Cannot threaten garnishment, seizure of property or other legal action unless the agency intends to take action (and is legally allowed to take that action).
- Cannot make false statements, such as that the debtor has committed a crime or that the collector is an attorney.
- Cannot send documents that look like court or legal documents but aren't.
FDCPA only applies to consumer debt, not debt that someone accrued while running a business.
Many states require collection agencies to be licensed and/or bonded. Always find out what your state requires and check whether the collection agency you're considering is compliant. While ACA International membership is not mandatory, it does mean the agency has been vetted.
If your account is a commercial or B2B debt, look for a collection agency that is certified by the Commercial Law League of America (CLLA) and is a member of the Commercial Collection Agency Association (CCAA). Like ACA International, both require commercial collection agencies to follow a strict code of ethics and proper accounting principles and to be bonded.
Beyond a lack of proper licenses and certifications, another red flag is the service having been sued. It's usually easy to uncover past or current lawsuits with a simple Google search.
Debt Collection Fee Structures
Many factors determine collection agency fees, including the size of the debt portfolio, the type of work necessary to collect the debt, the age of the account and the agency's experience level.
There are two main fee structures. The more common type – a contingency fee – is a form of tiered pricing that only applies when an agency collects on your account. The less common fee structure is a fixed rate, or fixed fee, that the agency charges upfront.
Contingency fees are charged as a percentage of collected debt, and they are typically negotiable, especially for accounts that have a significant balance owed. Contingency fees, on average, range from 20% to 50% depending on the size of the debt and the age of the delinquent account. Some agencies display their rates on their websites, but most require you to contact the firm for the exact rate you'd pay on your accounts.
The lowest rate doesn't always mean the best results. Pay attention to the return rate. If you pay a 25% fee on a $1,000 debt and the agency collects only $300, your return is $225. However, if you pay a 35% return rate and the agency collects $500, you reclaim $325. Talk to agencies, but also do your due diligence (checking references, looking up customer reviews, etc.) to see how well an agency performs in recouping debts and its return rate.
Although this is not as common, some agencies charge a fixed fee for collections. You pay the fee upfront and keep 100% of the funds the agency recoups for you. An agency will typically only agree to this if the debt is less than 90 days old – otherwise known as precollection – or just over 90 days old. This rate structure is rare, but it can save you money on collection fees if you seek collection on newly delinquent accounts.
When assessing which fee structure is right for you, carefully consider the age, volume and breadth of your accounts. If you ask for a quote over the phone, request that the agent send you an email of the quote for future reference. Many agents may negotiate pricing if you ask.
How Collection Agencies Use Technology to Recover Money
The best collection agencies use tools such as technologies, partnerships with other agencies and attorneys, and a highly skilled and trained staff to recover money owed to your business. Here's more about the tech they use to locate debtors and recoup money owed to you.
Skip-tracing services locate customers who are hard to find. Typically, agencies consult databases that allow the collection firm to find debtors who have moved without leaving a forwarding address. Many agencies offer this service, but some provide advanced features that allow them to find even the hardest people to locate. If an agency does not offer skip tracing, it will have a much harder time finding debtors who have moved or fled the state, and the chance of you recovering any money is very slim.
Today's tech lets you go beyond phone calls and snail mail; collection firms work more directly with debtors to negotiate payments. These strategies appeal to younger debtors and those who are uncomfortable discussing their payment obligations over the phone.
Algorithm-based collections tailor collection strategies to the debtor. Collection agencies can build a profile to better understand the debtor and the right way to resolve the debt. Often, email is the first form of communication, rather than a formal letter.
- Online access allows you to quickly submit new delinquent accounts, monitor the status of current accounts, communicate with the agency and run reports on the status of your collections. This is especially helpful if you have multiple past-due accounts and time is of the essence.
How to Work With Your Collection Agency
You want a collection agency that is a partner, not just a contractor. To that end, you'll need to invest effort into managing the relationship. The agency should be willing to meet face to face periodically to review the status of your accounts, and they should promptly return phone calls and emails, ideally within one business day.
There's work to do on your end as well. To boost your chances of recovery money rightfully owed to you, give the agency as much information about the debtors as possible, including the following:
- Names, addresses and telephone numbers
- Cell phone numbers and email addresses
- Names of the debtor's spouse, friends, relatives and neighbors
- Information about whether and how the debtor has responded to your debt collection efforts
- Details about the purchase or transaction, including the date
- Any paperwork related to the transaction, including contracts and credit applications
- Nicknames, maiden names and aliases
The more information the agency has, the more money you can collect.
What to Expect in 2020
The collection agency industry is in for some changes as the cost of payroll increases; commission rates decrease; the rules and regulations regarding debt collections tighten; and as acquisitions, mergers, and closures take place.
New rules and regulations have passed that affect how collection agencies contact consumers.
In late 2019, the U.S. Court of Appeals for the Seventh Circuit ruled against the Consumer Financial Protection Bureau's (CFPB) collection proposal, which would have allowed collectors to send consumers disclosures indirectly through hyperlinks. Instead, debt collectors must clearly identify themselves by providing pertinent information upfront, such as the amount of debt owed and the name of the creditor they are representing. In 2020, the CFPB may propose other modifications and clarity on how agencies can collect consumer debt.
March 2020: As more states issue proclamations shutting down all nonessential businesses, collection agencies, like many other other businesses, have pivoted, with many collections employees working remotely. The business of collections continues, with many workers making calls from home.
Collection agencies are cautioned by the Association of Credit and Collections Professionals "to be mindful of the challenges that telecommuting may impose under other state and federal laws, e.g., the Fair Debt Collection Practices Act (for third-party collectors) [and] HIPAA (for medical debt collectors)."
Some states, including New York and Massachusetts, have temporarily suspended debt collection on certain types of debt. We'll keep you updated on new federal and state developments relating to debt collection.
Summit Account Resolution
Summit AR is great for any small business, as it provides collection services for both consumer (B2C) and commercial (B2B) collections. It collects within a range of industries throughout the United States, including medical, dental, employee reimbursement, consumer and court-ordered obligation, child and spousal support, and all commercial industries. If you are seeking collections in Hawaii, Nevada, New Mexico, New York or North Carolina, you'll need to speak with a Summit AR rep. These states have specific laws that can complicate the debt collection process.
This agency charges on a contingency fee basis. Collection rates vary by collection type, size and age. They average between 7.5% and 50% for each account, with consumer rates typically around 35%. The agency requires a $50 minimum debt to be collected on each account. In addition to standard collection services, Summit AR provides accounts receivable consulting, skip tracing, accounts receivable recovery assistance and litigation.
Summit AR has a portal on its website, and when you log in, you have immediate access to your delinquent accounts. You can check an up-to-date status of the accounts you've submitted, and you can submit new accounts to Summit AR. When you sign on with Summit AR, you receive an account manager as your dedicated point of contact. This agent will answer any questions you have, and they'll treat your debtors with respect and dignity.
Prestige Services Inc.
Because commercial and consumer debt collections are typically handled differently, it is ideal to use an agency that specializes in the area you need rather than both. PSI specializes in B2B collections, and it collects debt repayments throughout the United States, Canada and Mexico.
PSI requires a $200 minimum collection balance and charges on a contingency fee basis. The agency's rates are generally 5% to 10% lower than many competing agencies. For accounts with a balance of $200 to $3,000, PSI's rate is 25%. For accounts with a balance ranging from $3,000.01 to $20,000, the rate is 22%. Rates are negotiable, and volume discounts can also be applied. Litigation fees are extra and can go up to 40%. PSI provides timely, efficient collection services; according to the agency, it typically reaches a resolution with the debtor within the first 45 days after collections commence. After your debtor pays PSI, the agency releases an end-of-month remittance check to you, complete with payment details.
On its website, PSI features two customer portal options – the placement portal and the status portal. Within the placement portal, you can get a free quote on a past-due account you'd like to turn over to PSI, and you can submit new accounts to PSI. The status portal provides live status updates for each account you've submitted. Within each status update, PSI includes detailed notes about the interactions between the collection agency and the debtor.
Rozlin Financial Group Inc.
RFGI services dental and medical practices, hospitals, schools, real estate and property management companies, utilities, retailers, and lending service providers (credit cards, auto loans, mortgages, etc.).
RFGI's fees are based on how much money it recovers from the debtor. If it is unable to collect on an account, there is no charge. RFGI requires you to have a minimum of five accounts. To request a price quote, you can call RFGI toll-free, or you can complete a form on the agency's website to have a representative contact you.
RFGI collection agents are required to participate in active training to stay up to date on the best collection techniques. This allows them to take a tailored approach to each of your consumer collection accounts while complying with the latest laws and regulations.
Debtors can pay RFGI by check, by credit card or through an online payment portal. Once RFGI receives a payment, it mails you a check. If your debtor pays monthly, RFGI will send you a remittance check each month. If your account requires legal action, RFGI can refer your account to the appropriate parties for litigation.
To determine the best collection agencies for small businesses in 2020, we spent dozens of hours researching the top services. Here is an explanation of our selection process.
Locating the Best Services
To find the best collection agencies for small businesses, we started by looking at the services that appear on reputable online sources, such as review and business websites. We also conducted our own research into the industry to find others. We examined more than 30 collection agencies in all. (See our full list of collection agencies and their websites below.)
Choosing the Best Services
After our early research, we whittled our list down to 17 candidates for our best picks: Account Management Systems; Alexander Miller & Associates; Aspen National Collections; Benjamin Michael & Associates Inc.; Credit Management Company; Martini, Hughes & Grossman; National Service Bureau; Prestige Services Inc.; Rapid Recovery Solution; Rocket Receivables; Rozlin Financial Group; Summit Account Resolution; The Kaplan Group; Tucker, Albin & Associates; Vengroff Williams Inc.; and Your Collection Solution.
Researching Each Service
We further narrowed down the list based on different use cases and the criteria we set (see Analyzing Each Service). As part of our research, we reviewed each agency's website, compared services and prices, and read user reviews. Posing as small business owners, we contacted the agencies' customer service and sales teams to gauge the quality of service and obtain more information than was accessible online.
Here is a full list of collection agencies and a summary of what each company claims to offer. This alphabetical list also includes our best picks.
Account Management Systems – AMS collects commercial debts. Based out of Tampa Bay, this debt collection service collects debts nationwide, charges no upfront or sign-up fees, and only collects money if it recoups your debts. https://www.amscollects.com/
Alexander, Miller & Associates LLC – Alexander, Miller & Associates is a national agency that specializes in large-balance collections. It offers demand letters, commercial credit reports, onsite investigations, prelitigation services and skip tracing. The company states that it has collectors who specialize in trucking transportation and freight, wholesale seafood and produce, restaurant supply, and heavy equipment rental. https://www.amafirm.com/
Asset Compliant Solutions – Asset Compliant Solutions is a commercial collection agency that offers standard collection services as well as 45-day delinquent secured collateral loans, unsecured open and revolving lines of credit, and an online portal. https://www.acs-cam.com/collection
Atradius Collections – Although Atradius Collections is primarily a U.K.-based commercial collection agency, it also has a base in the U.S. It specializes in multinational accounts and offers collection services to over 30 countries. It has a very high return rate. To get a free quote on pricing, you can access its online portal. https://agora.atradiuscollections.com/us/
Aspen National Collections – Aspen National Collections works with timeshare and education industries, as well as municipalities and utilities, to collect outstanding debts. It tailors its debt collection strategies to each client. This agency's website has an online portal where you can log in and monitor the progress of your past-due accounts. http://aspennational.com/collections/
Benjamin Michael & Associates Inc. – Benjamin Michael & Associates is based in New York City. The firm utilizes techniques such as demand letters, skip tracing, and reports on demand to help you recover debt from delinquent accounts. http://www.benjaminmichaelassociates.com/
Credit Management Company – Founded in 1966, Credit Management Company recovers debts for government, healthcare, higher education, financial services and commercial businesses. It has an online system for debtors to make payments. In also offers claim resolution services. http://www.creditmanagementcompany.com/
Debt Recovery Resources – This is a full-service debt collection agency that not only helps recover debts but can help its clients improve their internal debt collection processes. Debt Recovery Resources can manage accounts receivable, perform free legal background checks and find debtors. https://www.debt-rr.com/
FCR Collection Services – Powered by FEDChex, FCR Collection Services offers several payment solutions to companies nationally. Its services include check verification, automated clearinghouse, remote deposit capture, electronic payments and risk management. https://www.fcrcollectionservices.com/
Hunter Warfield – This collection agency serves a variety of industries, including property management, medical offices, financial services and commercial collections. This collection agency is best suited for businesses that provide credit on goods or services or have extended, relationship-based contracts. https://www.hunterwarfield.com/
Martini, Hughes & Grossman – Martini, Hughes & Grossman offers custom approaches to debt collection. It has in-house legal advisors, uses skip-tracing technology, sends bimonthly status reports, and collects on both B2B and B2C accounts. It can track down debt nationally and internationally and is accredited with the Better Business Bureau. http://mhg.bz/
National Service Bureau – National Service Bureau helps with both B2B and B2C collections. It offers precollections, third-party collections, letter services, litigation, and skip tracing to a variety of industries, including commercial, education, financial, insurance, medical, telecom and utilities. http://nsbi.net
*Prestige Services Inc. – PSI is our choice for the best B2B collection agency. It provides commercial collection services throughout the U.S., Mexico and Canada. It provides professional skip tracing to help locate debtors, and it can investigate businesses. If the debtor won't pay even after all of PSI's efforts, the agency can forward the account to an attorney in the debtor's area. https://psicollect.com/
Rapid Recovery Solution – Rapid Recovery Solution provides collection services both nationally and internationally. It caters to all commercial accounts and medical billing accounts, using a four-step system to collect funds from debtors. http://rapidrecoverysolutions.com/
Revenue Assurance Partners – This solution customizes its service to your business. You can outsource as many or as few internal processes as you want. The company states it has over 50 years of experience collecting past-due accounts. It also provides auditing, reporting, legal forwarding and other collection services. https://rapcollect.com/
Rocket Receivables – This debt recovery agency supports collections for small and midsize businesses. It focuses primarily on the healthcare, education, professional services, residential, commercial, contracted services, trade and general retail industries. It has fixed fees for newly delinquent accounts and contingency pricing for older accounts. https://www.rocketreceivables.com/
Ross, Stuart & Dawson Inc. – This commercial collection agency provides services to businesses throughout the U.S. It can help you with follow-up letters and statements, soft calls, credit reports, and portfolio liquidation services. http://rsdcollects.com/
*Rozlin Financial Group Inc. – RFGI is our choice for the best B2C collection agency. It uses a tailored approach to connect with debtors, including phone, mail, email and online chat. It serves various industries, including dental and medical offices, hospitals, schools, property management companies, utilities, retailers, and lending service companies (e.g., credit cards, auto loans and mortgages). It is accredited by the Better Business Bureau. https://www.rfgionline.com/
Smyyth LLC – Smyyth Collections LLC, partnered with Leib Solutions LLC, is a commercial collection agency that serves a variety of industries, including commerce, property and casualty insurance, health insurance, healthcare, law firms, and CPAs. It provides basic features like first- and third-party collections, collection letters, and call services, plus more advanced techniques like accounts receivable management and revenue cycle consulting. https://www.smyyth.com/solutions/collection-management/
*Summit Account Resolution – This agency is our pick as the best collection agency for small businesses, and it serves both consumer and commercial collections. It offers an online portal, a skip-tracing department and litigation services. Once you sign up with this agency, you receive an account manager who is available to answer all your questions. https://www.summitcollects.com/
The Kaplan Group – The Kaplan Group is a commercial collection agency that specializes in international, judgment and large-balance claims. It requires a minimum of $1,000 to be collected on and has low contingency rates. It provides advanced collection services, such as background investigations, credit analysis, skip tracing, legal services and payment plans. https://www.kaplancollectionagency.com/
TSI – This agency provides collection services for commercial, education, financial, government, and healthcare industries for both SMBs and enterprises. It provides basic collection services like demand letters, calls, and payment reminders, as well as more advanced services, such as first- and third-party accounts receivable management options and skip tracing. https://www.tsico.com/
Tucker, Albin & Associates – This B2B collection agency has a network of over 500 private investigators and attorneys to help with debt collections across the globe. It uses a tailored approach to collect on commercial debts. http://tuckeralbin.com/
Vengroff Williams Inc. – This agency focuses on four specific collection areas: credit to cash, subrogation, revenue cycle management and collections business process outsourcing. It offers services such as first- and third-party collections, nationwide subrogation management, and claim recovery. https://www.vwinc.com/
VeriCore – This international collection agency focuses on recovery, reporting and remittance. It takes a tailored approach to each collection account, ranging from soft to assertive. https://www.vericore.com/indexS.htm
Verliance Inc. – Verliance Inc. is a BBB-accredited collection agency that focuses primarily on the insurance industry. It offers many advanced collection services like first- and third-party collections, benchmarking data, credit checks, delinquency rate modeling, and asset searches. http://www.verliance.com
Your Collection Solution – This collection agency collects consumer and commercial debts. It has a contingency-based fee structure. Though headquartered in Florida, Your Collection Solution can work to recoup debt in the U.S. and several other countries. The company states its management team has over 30 years of experience in the industry. https://www.ycscollects.com/
Prestige Services Inc.
Summit Account Resolution
Rozlin Financial Group Inc.
Editor's note: Looking for a collection agency for your business? If you're looking for information to help you choose the one that's right for you, use the questionnaire below to have one of our vendor partners contact you about your needs.