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Working with an OCA

In the accounts receivable world, an older account has smaller odds of being paid. It can be very expensive to hold onto accounts that you will not be able to collect using the methods at your company. When concentrating on other aspects of your business proves to be a better use of company time and resources, using an outside collection agency (OCA) to collect unpaid debt is a great option that can actually help your business grow.

Collection representatives at certified commercial collection agencies are trained on current collection techniques, technology and compliance issues. They also generally have an understanding of business and collections laws and regulations. Therefore, using an outside collection agency will save time and likely provide much better results than you could achieve on your own.

According to the International Association of Commercial Collectors, when an account reaches 90 to 120 days past due, it's time to consider placing them with an OCA. If your business is sitting on unpaid invoices without actively pursuing them, it is worth it to give them to a professional commercial collection agency to handle. Invoices are not going to get collected if you keep them, and the percentage you will pay the agency will be well worth it.

The Commercial Law League of America (CLLA) suggests that when choosing which OCA to work with, it is best to ask the following questions:
  • What has been their experience in collecting accounts similar to yours?
  • Who have they dealt with in your industry and can you contact them for a reference?
  • What collection procedures will they apply to the collection of your accounts?
  • Will they rely on letters or will they also be using telephone and email collections?
  • When necessary, do the have ability to  place your accounts with attorneys for legal action?
  • Does the quoted fee include all of these services or are there different fees for telephone collections and legal forwarding?
  • Will the agency handle your account, in-house, or will they use a third-party for the account or any potion of the claims you submit?
  • Finally, look for the Seal of a CERTIFIED agency to be sure of receiving the highest level of professional collection services, competitive results and ethical dealings with you and your debtors.
Once you have placed your claim with an OCA, please do not engage in discussions or negotiations with the debtor. If the debtor contacts you, simply refer them back to your agency. Debtors sometimes try to circumvent professional collectors in order to confuse or delay payments. Don't be taken in by this tactic. When a claim has been placed with a collection agency, all discussions and negotiations should go directly through them.

In order to keep the collection process moving smoothly, be sure to respond immediately to the collector's requests for further information, should they have any. The longer you delay, the longer it will take to collect your account. Or, it may put your collection agency in the position of not being able to collect your account at all.

If you have done your due diligence in selecting an OCA, don’t be impatient, allow proper time for the agency to work the accounts you have placed. It is in the best interest of the collection agency to resolve the accounts as quickly as possible. Micromanaging can take collector’s time away for properly working the account.

An agency’s main goal is to collect on a claim as quickly as possible. Typically when a claim is set,  a letter will be sent to the debtor indicating that their account has been sent to collections, and the letter will indicate the total amount due with instruction to remit payment immediately. In general, you can expect to be contacted within two weeks to provide an update on the account, and online account access may also be available if your chosen OCA offers that capability. Full payment, payment commitments or a payment schedule should be arranged within 30 - 45 days. However, if the agency is unable to collect on the account within the 30 – 45 day time frame, the account may be sent to an attorney with your approval.

The first contact the attorney will make with the debtor is known as attorney-amicable handling.  This is another attempt made on the claim to collect without resorting to legal action. Should this not result in payment, the agency may ask for your permission to elevate the claim to a lawsuit. It normally takes 60 days to serve the debtor with the compalint, and then the debtor will then have 20 to 45 days to respond. If the debtor does not respond, however, the attorney will file a motion for default judgment, which will take another 30-60 days to obtain from the court. If the debtor does answer, the next course of action and time-frame will be determined by his position. Once a final judgment has been made, the debtor will have 30 days to pay. If the debtor still fails to make payment, the attorney will issue an execution to the sheriff, who has 90 days to contact the debtor and arrange for payment. If this doesn’t result in payment, further legal proceedings will be required.


Positive cash flow is critical to the success of businesses both large and small. Just a handful of deliquent accounts can negatively impact the financial status of your company. So if you do not have the time or resources to perform collection activites in-house, it is wise to engage an outside collection agency. It is always in the best interest of an OCA to collect as much money as possible as quickly as possible. After all, if they don’t collect, they don’t get paid.