Selecting a debt recovery agency that is right for your type of referrals involves more than finding the lowest priced agency – it requires careful consideration.

This year, before you refer your debts to any recovery agency, find the one that is 'best-fit' for your existing and future recovery needs.

Where do you start? Look within! Look within your debt portfolio and ask: "what are the pain points in our collection strategy and how could a debt recovery agency assist?"

As a Credit Manager, there can be several competing priorities when selecting a debt recovery agency. These can include:
- Net return 
- Partnership and brand protection 
- Compliance and risk 
- Customer re-engagement 
- Litigation

Net Return

The best-fit debt recovery agency should not only be effective in recovering debts but innovative in their tactics and strategies to increase net return and reduce your volume of write-off through the use of analytics.


Analytics have revolutionised the debt recovery industry and the way agencies now collect debt.

In an article written by Nicholas Harrak, Head of Government and Commercial at Recoveriescorp, (May 2014, AICM magazine "Analytics: Why they're critical for a sustainable business model- Act now!") he emphasised recoveriescorp's analytics-based strategy to increase debtor engagement through the 'propensity to pay' model that accurately prioritises delinquent accounts and determines enhanced collection strategies based on both the probability of recovery and expected recovery amount.

Debt recovery agencies are now employing smarter and more effective ways to ultimately increase your net return, reduce the volume of write-off and increase customer re-engagement at earlier stages of debt referral.

Business Intelligence

Business intelligence (BI) is a technology-driven process that analyses data to provide stakeholders with improved risk mitigation strategies.

An example of debt recovery BI is the use of 'intel codes'. Intel codes are used by operators to understand the reason for non-payment prior to and after debt referral. This data can be translated and reported back to your company in order to better understand and predict how many customers will fall into hardship categories for specific reasons.

Your next agency must be able to provide you with data and guidance that assists your credit lending team with strategies to effectively control the volume of debt, improve business processes and understand your customers to mitigate future financial risks. This can assist your company in increasing net return.

Panel Positioning

As a Credit Manager, you want the security of knowing that your next debt recovery agency is going to increase net return. When working for 'Tier One' clients, it is common for debt recovery agencies to be benchmarked against other collection agencies. This can provide key performance metrics that allow you to determine which of the agencies is effectively increasing your net return in a given period. Ultimately, the agency that is consistently the number one performer will be the 'supplier of choice' for present and future recovery needs.

Even if your requirements are not large enough to warrant a panel of providers, don't be afraid to do your research on the agencies that you are considering adding to your panel of suppliers with this approach in mind. Speak with other Credit Managers within your industry that are already using the agencies you are considering to find out if they are happy with the agency's performance against their various KPIs. If applicable, find out how the agency is averaging each month against their competitors as it will assist you in gaining a clearer picture of their ability to increase net return for their clients.

Partnership and Brand protection

Choosing a reputable agency is important but there's much more than reputation to think about. You need a recovery agency that fits your corporate culture and provides the kind of business relationship you consider important.

Brand Protection

Before referring delinquent debts to a recovery agency, look to partner with an organisation that perceives value not only in recovering payment in full or establishing payment plans, but also in preserving a positive relationship between the customer and your brand.

Your 'best fit' agency should understand your expectations and partner with you to help you meet your goals with sound advice on reducing delinquency. They will provide you with more than dollars collected – establishing a strong and transparent partnership that will yield long-term value to both parties.

Compliance and Risk


Debt collection activity is heavily regulated by legislation and other obligations to ensure all parties in the collection process – creditors, collectors and customers – are protected. Failure to comply can lead to severe penalties, not only for the collection agency, but also for the creditor. Remember: a creditor's obligation does not end because they have outsourced the collection activity. Besides financial risk, there is also reputational risk to be considered.

Choosing an agency with a strong compliance understanding and culture is vital. Ask your prospective collection agencies to demonstrate how they ensure compliance at all stages of the process, including training programs for collectors and ensure that they are prepared to work collaboratively with you to report back on their performance against legislative requirements. Every agency will claim to be compliant but you should look for the agency that can demonstrate this commitment to your satisfaction. After all, it is your company's reputation on the line.

Quality Assurance and Data Security

In addition to legislation – which can appear opaque at times – it is important to choose an agency that follows international best practice.

Ask your agency if they are accredited to any ISO standards. ISO accreditations go a long way towards ensuring the service you will receive will be of a consistent and auditable quality.

Of the various ISO accreditations available, two non-negotiables are ISO 9001 (Quality Management) and ISO27001 (Information Security). When an agency is certified to the ISO 9001 standard, it means that their internal quality management systems will meet the needs of customers and stakeholders as well as statutory and regulatory requirements.

With data security and privacy of primary importance in today's world, an ISO 27001 certification will mean that your agency has in place appropriate levels of encryption and firewalls to rival the Great Wall of China to protect your customers' private information.

If your next collection agency does not follow the correct procedures when it comes to collection legislation, quality assurance and data security, you could face penalties from regulators and damaging publicity – a nightmare scenario for any Credit Manager.


While the aim of early engagement strategies is to avoid the need for litigation, most debt recovery agencies in Australia recognise the need to provide end-to-end collection services, including legal recovery. Overlooking this critical stage of the process when selecting a collection agency could result in sub-standard results, or higher costs due to the need to engage an additional collection partner specifically for litigation.

Finding the 'best fit' debt recovery agency with a reputable legal recovery arm attached is surprisingly simple. First, ensure that the partnered law firm is specialised in your industry, whether it be insurance law, commercial litigation, debt recovery or contract law.

Then ensure your next debt recovery agency has highly professional and knowledgeable in-house counsel that can provide you with the sound and actionable legal advice you need when it comes to legal action, enforcement of judgements or bankruptcy.

Customer Re-engagement

Debt recovery agencies that suffer a negative image in Australia are generally inexperienced in the art of debt recovery, with unskilled or poorly trained employees that are easily frustrated. If the agency is skilled at collections and mastering debt recovery, the process will incorporate a high level of customer service, enhancing customer engagement and improving financial results. Customer service is the key to effective collection in today's environment.

Enhancing the customer service experience should not be limited to interactions between the agency and your customers. It should also extend to the agency offering your company stakeholders transparent reporting, auditing, and compliance oversight that enhances your experience.

Learning and Development Programs

When selecting your next recovery agency, find out whether their employees receive ongoing training, education and career development programs supporting their career development. Your debt portfolio deserves highly trained, engaged and effective leaders, qualified in areas such as Emotional Intelligence (EI), negotiation techniques, leadership and customer service skills.

Having highly trained and skilled operators representing your debt portfolio will ultimately increase your net return, reduce your write-off volume and ensure collection activity attracts a low – or zero – complaint ratio, protecting your brand image. It is a high risk to refer your debt recovery needs to an agency that does not appropriately train their staff.

Client-specific Training

As a Credit Manager, you want a seamless end-to-end referral process. You want the transition to be so smooth that your customers build trust with the agency because their operators have sound industry, client and product knowledge. To guarantee a positive outcome, provide your best fit recovery agency with client specific training on a granular client level, based on your specific challenges and requirements. Only this way can you ensure that you will be provided with effective, knowledgeable leaders and operators to work your debt portfolio.

Questions to Ask

Credit Managers, when selecting your debt recovery panel in 2016, don't be afraid to ask an agency the following questions: — What are some examples of innovation you have implemented in your business?
— How will you apply analytics to my portfolio?
— What unique service approach do you employ in debt recovery to make you stand out?
— Where you serve in panel arrangements, how are you positioned against your competitors?
— How can you demonstrate your company's commitment to the personal and career development of your staff?
— How does your agency handle complaints to better protect your clients' brand image?
— Will your operators be trained on our specific collection requirements?
— Do you have a leading edge propriety owned IT infrastructure to effectively manage referrals?
— Is the agency able to tailor solutions specifically to our business recovery needs?

Asking these questions will assist you in determining which agency is 'best fit' for your recovery needs and increasing your customer engagement and net return.

Amaran Navaratnam is Portfolio Manager at RecoveriesCorp

May 2016 - FNSMCA301 - Collect Debts and FNSMCA402 Initiate legal recovery of debts - FNS31415 Certificate III in Mercantile Agents - FNSCRD403 - Manage and recover bad and doubftful debts - FS40120 Certificate IV in credit management

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