Knowing the two types of debt collections is importing to both upcoming agencies and business owners with accounts receivables. Collection agencies either buy the debt they are collecting on, or they simply get a percentage of what is collected. There are certain circumstances where up front fees are required to pursue the debtor through contingency collections, but the return can be far higher.
Bottom line, depending on what you are trying to do is the best option for you. If you are trying to just dump your accounts, get paid, and move on; the second option might be the best route. Contingency collections are ideal for continuing business for a multitude of reasons. Your collection agency is supposed to be a representation or extension of your business. You do not want “hungry” collectors harassing your clients/patients/etc. You can also get a higher percentage for a little more work with contingency collections as well.
Thanks for reading!
– Mike Murphy
Nexum Group Inc.