How Much Does It Cost to Hire Credit Collection Services?

Debt collection leaves your team exhausted and you with very little time to do anything else. It frustrates everyone!

It’s not uncommon for companies to struggle with debt collection, but this doesn’t have to be commonplace for you. With credit collection services in Houston, you can hand this responsibility to us! We will handle the burden of payment collection and staying in touch with past-due customers.

However, if you have never hired a collection agency before, you might have questions! If you want to know what collection agencies do, read this blog. And if you want to know about their pricing structure, keep reading this one!

How Much Do Collection Agencies Charge?

In this blog, we want to shine a light on the two primary pricing structures used: flat fee and contingency fee. Let’s dive in!

1. Contingency Fee

Most collection agencies operate on an arrangement based on contingency. This is also known as the “No Payment, No Fee” structure. Basically, the agency will only collect the fee if it successfully collects your debt.

For instance, a commercial collection agency charges 20% of the amount of money owed by a moving company, as an example. The total recovered amount is $10,000. The agency, as contracted, keeps $2000 as commission. The moving company receives $8000. However, there are no collection agency fees owed by the moving company if the recovery fails.

But how do collection agency services determine their fee structure? Here are some of the factors:

Age: Older debts are harder to collect, so they usually have higher fees.
Balance: If the balance is small, the fees are higher because the profit margins are relatively lower for the agency.
Industry: The performance and nature of different industries often affect the fees.

2. Flat Fee

On the other hand, some commercial debt collection agencies have a one-time fee, usually between 15% to 25% per account. The recovery outcome doesn’t matter, this fee is fixed.

Many commercial debt collection agencies in Houston charge a flat fee, and clients prefer it that way. They know the upfront total cost, which reduces the risk of unexpected costs. The billing is easy for both the client and the agency. It also encourages the agency to work more efficiently.

However, on the other hand, the flat fee model isn’t flexible, and the lack of boundaries may lead to underpricing or overpricing.

When you hire a professional credit collection agency, you need to consider their pricing, performance, and track record of successful recoveries. At Nelson, Cooper & Ortiz, LLC, we offer transparent plans that clearly highlight our fees. We make sure you understand precisely what you’re paying for. So, call us at (713) 360-6645 or toll-free at (800) 939-7213 to schedule an appointment soon.