Hiring a commercial collection agency in New York involves several steps to ensure that you choose a reputable and effective agency that can handle your business’s collection needs.
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Commercial collections requires a customized approach, in depth negotiation and legal suit only if necessary. Recovery on commercial accounts is generally over 80% on accounts less than 1 year old.
Commercial Collection Laws in New York
- No Federal Regulations: Unlike consumer debt collection, which is heavily regulated by the Fair Debt Collection Practices Act (FDCPA), commercial debt collection in New York doesn’t fall under any federal regulations.
- Focus on the UCC: The primary framework for commercial debt collection in New York is the New York Uniform Commercial Code (UCC). This code outlines the legal rights and obligations of both creditors and debtors in commercial transactions.
- State Licensing: Debt collection agencies operating in New York must be licensed by the New York Secretary of State and comply with the Commercial Collection Association of America (CCAA) Code of Ethics. This code sets ethical standards for how agencies interact with creditors, debtors, and attorneys.
Hiring a Collection Agency
- Determine Your Needs: Before you start looking for a collection agency, understand the type of debts you need to collect, the amount of the debts, and any specific industry requirements. This will help you find an agency that specializes in your particular needs.
- Research Agencies: Look for agencies that are licensed and bonded in New York, as state laws require collection agencies to have these credentials. It’s important to choose an agency with a good track record in collecting commercial debts, especially in your industry.
- Check for Compliance and Certification: Ensure the agency complies with federal laws. Certifications from industry associations like ACA International or the Commercial Law League of America can also be a good indicator of a reputable agency.
- Evaluate Collection Techniques: Understand how the agency approaches debt collection. Ask about their strategies for collecting debts, how they handle disputes, and what kind of communication they maintain with debtors. Ensure their methods are professional and ethical to maintain your company’s reputation.
- Review Fees and Contracts: Collection agencies typically operate on a contingency basis, meaning they only get paid a percentage of the debt they successfully collect. Compare fees, but also consider the agency’s success rate and services. Carefully review contracts for any hidden fees or terms that could be unfavorable to your business.
- Ask for References: Request and contact references, especially from businesses in your industry. This can provide insights into the agency’s effectiveness and professionalism.
- Ensure Good Communication: Choose an agency that communicates well with you, providing regular updates on their progress and being responsive to your inquiries.
- Registration and Licensing: Verify that the agency is registered with the New York State Department of Financial Services, as required by law.
By following these steps, you can find a commercial collection agency that meets your business’s needs and operates within the legal requirements of New York. Remember, the goal is to recover debts efficiently while maintaining a positive relationship with your customers and adhering to all regulatory requirements.