When should a business engage the services of a third party commercial collection agency?

Often asked, the timeline of when to place an account is usually subjectively assessed and can in fact significantly reduce success rates when accounts are held too long. The chart to the right illustrates a very distinct and rather dramatic example of the reduced chances for recovery the longer a creditor waits to place an account.

If an account is aged over 90/120 days and a reasonable resolution for payment is not mutually agreed upon, outsourcing that account should be given serious consideration. The timeline of collection success is now working against you, not to mention the necessity of having a reliable third party evaluate the debtor’s financial status and make the appropriate recommendations. Discretion should always be used when outsourcing accounts for collection, as rarely are the circumstances the same. Sometimes, placing an account earlier than 90/120 days is necessary due to an unexpected adverse debtor circumstance that immediately places the creditor's financial interest at risk.