Home Others The Importance Of A State Collection Agency When Collecting Debts

The Importance Of A State Collection Agency When Collecting Debts


Running a company is already hard as it is, but one challenge that stresses business owners to their wits’ end is when a customer doesn’t pay their bills.

There are different reasons why clients don’t settle their accounts. Some customers may experience a sudden cash shortage leading to missed payments. Other clients will not pay when they’re not satisfied with a product or service. Some clients don’t pay because they’re busy, while some are merely dishonest.

When customers don’t settle their bills on time or don’t pay at all, you should work things out first before turning over the account to a collection agency. Here are some tips to consider:

Talk to your client.

The first step to collecting unpaid debt is to talk to your client, who is having difficulty settling their account.

If the client sees that you’re genuinely concerned in helping them pay their unpaid bills, they’ll be more cooperative in working out and following a debt repayment plan. In the end, smaller payments are still better than non-payment.

Be patient.

It’s challenging to be patient when you also have operational expenses to pay to keep the business running. However, aggressive methods are not effective in forcing clients to pay for their debt. Some clients become more determined to stop paying when you resort to insults and derogatory comments.

Simplify your payment processes.

Customers can get overwhelmed by complicated payment procedures, so non-payment may be a sign that you need to streamline your operations.

Clients are more likely to pay when you have the payment methods that they’re accustomed to. Consider accepting payments via credit card, check, and online payment solutions.

Seek the help of state collection agencies.

If a customer is determined not to pay, much less, talk to you about their delinquent account, it’s time to seek the services of a state collection agency.

The Importance of a State Collection Agency When Collecting Debts.

If you’re still not getting results after giving your client enough time to settle their unpaid account, it’s time to work with a collection agency to help recoup your money. There are many collection agencies that you can turn to, but a state collection agency is more reliable and competent.

Find out why it’s crucial to have a state collection agency to handle delinquent accounts.

1. Licensed to Collect Bad Debt.

Not all collection agencies are the same. A collection agency must be licensed in every state to pursue debtors. The license requirement of collection agencies is somewhat similar to what real estate brokers and agents need.

A collection agency and a real estate agent cannot practice in another state just because they acquired a license in one state. If your client finds out that the collection agency contacting them is not licensed by their state to perform collection activities, your company can get into trouble as well. Hiring a collection agency that’s not authorized in all states can be more troublesome instead of beneficial to your credit collection. Thus, it’s crucial to find out the credentials of a collection agency before turning over your delinquent accounts.

Cornerstone Support assists collection agencies and debt buyers in obtaining state licensing to make them legally authorized to recover the debt.

2. Understand Ethical Collection Practices.

Some collection agencies resort to unethical collection practices to get people to pay up. These unscrupulous behavior include calling between nine in the evening to eight in the morning, using abusive or obscene language, and threatening the debtor with arrest or violence.

The law still protects people with delinquent accounts, and state collection agencies understand this. There are actions that collection agencies can and cannot do. By working with a state collection agency, you can be sure that delinquent accounts will be dealt with correctly and according to state laws.

3. Experts in State Regulations.

Ideally, all collection agencies should adhere to the rules and regulations of the Fair Debt Collection Practices Act (FDCPA), which is a federal law that oversees collection agencies and shields customers from various illegal practices.

However, the FDCPA is just one of the main laws that collection agencies have to follow. Collection agencies should also consider state laws. For example, Nevada follows federal regulations when it comes to debt collection, but California has additional rules that collection agencies must adhere to when it comes to interacting with debtors. Different states also have varied statutes of limitations on debt. Thus, it’s crucial that you only let state collection agencies that are familiar with various state laws.

Recouping the money a client owes you will be more effective when the collection agency handling your delinquent accounts are experts when it comes to debt collection by state.

4. Knows How to Recover Your Money.

After a certain period, you can turn over a delinquent account to recover the funds that a client owes you. A state collection agency utilizes only the best industry practices to recover unpaid accounts effectively.

  • Getting in touch with debtors to find out why their account remains unsettled.
  • Inform the debtor what options they have and work with them to help them repay their debt.
  • Help establish a good relationship between the debtor and the company that the debtor owes money to.


Many businesses suffer from delinquent accounts, which negatively affect the financial resources of the organization. When your company is trying to pursue a customer into paying a long-standing debt, it’s crucial not to use unlawful collection tactics. Unethical collection strategies will not be useful for customers who are not adamant about paying their unsettled bills.

Instead, your company should try to engage the customer into accepting and following a debt repayment plan so that you can get paid while maintaining a good relationship with your client.

Working with a state collection agency to recoup money from clients is not only legal, but it’s also more effective.