recommendation that accounts be
placed with a collection agency when
they reach 90 days in arrears.
So, when it is time to call in outside
help, how do you select the right
partner from among the hundreds of
collection agencies in Kenya?
Choosing a reputable firm is
important. But there is much more
than reputation to think about. You
need a firm that fits your corporate
culture and provides the kind of
relationship you consider important
while you find out whether they
understand your expectations and will
partner with you to help you meet your
goals.
Focusing on these areas will help you
select the right collection agency for
your company.
The customer base
Are your customers doubling as
consumers, other businesses, or both?
The agency you select should specialize
in collecting from the category of
customers you serve. A consumer
credit collection agency for consumer
debts; a trade agency for business-tobusiness accounts. If you have a mixed
portfolio, consider dividing it. This way
you will be able to use the expertise
of your collection partners most
effectively.
Another option is to find a company
that has extensive experience in both
consumer and trade collections. I have
on most occasions recommended
where possible and the size of portfolio
is big that you hire more than one
agency for competition purposes.
Size and Location
Collection agencies range in size
from small local agencies to large
multinational firms. One size does
not fit all. The size and reach of your
collection agency should match that
of your company. If you are a small
business providing goods or services
44 MAL 13/16 ISSUE
within your town or region, a small
collection provider with good local
contacts will be able to effectively
handle your accounts.
if there are any negative financial
issues that may affect the ability of the
agency to pay you your money once it
is collected.
If, on the other hand, you sell
nationwide or internationally, look for
an agency with contacts and expertise
across the Kenya and in the countries
where you do business.
It is prudent to check into their
accounting practices. Do they maintain
a separate account where monies from
collections are held until remitted to
you, the client? These are called “trust
accounts,” though this may happen
the best practice is that they merely
do the follow-up and all the payments
are directly made to you to eliminate
duplication and acts as embezzlement.
Integrity and Standards
If you hope to re-sell to your customer
once the bad debt is cleared up,
select an agency that values integrity
and conforms to high standards of
customer relations. The way your
collection Agencies handles the
collection process and your customer
reflects on your business.
A reputation for unethical collection
practices and unprofessional
treatment of customers is viral.
Not only will it affect re-selling to
current customers, it may cost you
prospective customers as well.
The challenge we have in Kenya is
lack of independent regulatory bodies
in absence of consumer credit act
that can be tasked with regulating the
collection industry plus certification
that can ensure that the agency adheres
to a strict code of ethics and generally
accepted accounting principles.
It is with this in mind that I call
for strengthening of the institute of
credit management as this seems to
be the only body that has interest and
curriculum that suits this task. Before
engaging the agency you may call
business where the agency is located
and served. Check to make sure
there have not been any complaints
against the agency to which it has not
responded appropriately and attempted
to resolve.
Legal and Financial Position
Size does not necessarily mean
strength. Smaller to mid-size agencies
can be more financially stable than a
large, public firm. Try to determine
Ensure that the collection agency is
registered and be sure that your agency
of choice is licensed where necessary.
They should also be adequately insured
and bonded, if that is your requirement.
Experience
How long has the collection firm been
in business? How much experience
does the company leadership (executive
and managers) have in collections?
What about the collectors – are
they certified by an independent
association? What is the collector
turnover? These questions are crucial
in determining if the company has
enough expertise to effectively handle
your most valuable asset - your
customers.
It is important to note that since
the commencement of Credit
Management Exams which are
commonly known as CMT for
technician levels and CCP for
professionals they have gone a long
way in providing certification in credit
Management.
We strongly and authoritatively
consider this certification, debt
collectors to demonstrate their
knowledge and expertise of the
collection industry by passing a
rigorous examination. Has the agency
you are considering required that its
collectors achieve certification through
this program?