Collection Agencies

Pros and Cons of Hiring an Outside Collection Agency

Pros:

  • Hiring an OCA can allow staff to focus on other areas of the business.
  • Staffing levels and costs can be contained while collection efforts are increased.
  • Government staff can focus on customer service while the debt collector is the “bad guy.”
  • Unloading uncollectible accounts to an agency can improve the government’s bad debt ratio.
  • Remedies may favor in-house collections. 
    • Customer-centric tracking can allow government to withhold additional services or deny contracts to a delinquent customer.
    • Service terminations can prompt payment
    • Criminal penalties can be enforced
  • Accounts can be collected based on internal priorities

Cons:

  • Agency fees can be expensive in comparison to in-house costs.
  • Taxpayers may balk at the involvement of collection agencies as they are perceived to be adversaries rather than customer friendly.
  • Lack of control over accounts, service, quality.
  • Reputation of agencies can make outsourcing a tough sell to taxpayers and governing bodies.
  • Issues with revolving debt may be problematic.
  • You’re not the agency’s only client so your debt may not be prioritized as highly as you’d like.