Do you have a growing pile of unpaid invoices that you can't seem to find the time to tackle? Or do you think you or your staff is less than successful at getting people to pay? A collection agency can be the ideal way to turn that paper into actual dollars.

Collection agencies offer several advantages over internal collections efforts. First, these businesses specialize in collecting payment, which means the established ones are probably better at doing so than most companies. This expertise includes having access to the tools that allow them to track down people who can no longer be reached at the contact information they had provided. And, when necessary, these agencies typically have the legal know-how and ability to credibly threaten to file a lawsuit against the client who owes money.

Choosing the right collection agency to work with should definitely not be based on price alone. Most agencies work on a contingency basis where they are not paid unless a payment is actually collected. This fee can range as high as 50% of the total invoice, with higher fees typically found with collections lawyers. While you may be tempted to simply work with the company that offers the lowest fee, it can be a shortsighted way to compare agencies.

Instead, focus on how well the collection agency is able to do its job. Learn what percentage of a client's total outstanding invoices they are typically able to recover. Also, work with an agency that will deal with your customers in a manner that is consistent with your operating philosophy. If you intend to keep your customers after they are sent through the collections process, you will need to identify an agency that treats them as you would. See if you can get copies of letters or transcripts that are used so you can assess whether they jibe with how you would approach the client.

Any agency that you consider should be bonded and be able to demonstrate their financial stability. In addition, you should get specifics on the staff collections experience. Look for an agency with multiple senior collectors who have more than 5 to 10 years of experience. If the agency has less experienced collectors, see if there is a true commitment to career development, including regular training. At minimum, all staff members should be well versed in the Fair Debt Collection Practices Act (FDCPA) and adhere to it religiously.

Unlike many other outsourced services, you should expect regular and ongoing communications with your collection agency. Find out how regularly you will be updated and review the reports you will receive. Since the agency should ideally function like an extension of your finance department, it can also be very helpful to work with a collection agency that is willing to adapt its practices to integrate with yours more effectively.

Take advantage of the expertise that exists in the world and let a collection agency show you the money.