"Depend on the rabbit's foot if you will, but remember it didn't work for the rabbit."

I can't really say who authored this quote. I've heard it so many times in so many different incantations that I can't even be sure it's a direct quote from anyone!

However, the wording isn't as important as the meaning. As you know, I always see things as they relate to credit grantor and collection agency relations. I'm willing to bet that if you think about it, you can relate this to how at least some accounts are being handled in your office.

Think of the rabbit's foot as that "one more call". We all want to succeed. Sometimes success is achieved by letting go instead of holding on. Ask yourself this: what is going to make my debtor say yes this time when he said no all those other times? Why will he keep his promise this time when he's broken so many already?

Now ask yourself this: How much more cash would be flowing through the door if my staff could concentrate on fresher, more collectable accounts? You didn't get to where you are without the ability to see the answers to those questions.

Ernest Hemmingway once said "Never mistake motion for action."

David Ward, CEO

Welcome back for another edition of the Delta Recovery Systems monthly newsletter. In a previous issue, we examined the benefits of turning over accounts to an International Association of Commercial Collectors (IACC) certified agency for collection. This month we'll explore the added value of using an agency that is a Commercial Collection Agency Association (CCAA) member. We'll also examine the "hidden costs" of selecting an agency based merely on rates. As always, we welcome any comments, suggestions and/or questions you may have concerning our newsletter and industry issues in general.

Comments, Suggestions and Feedback

When you need to turn an account over to a collection agency, choose a Commercial Collection Agency Association (CCAA) member. These agencies are the only ones certified by the Commercial Law League of America (CLLA), one of the oldest and most respected creditors' rights organizations in the country. It is your assurance that the agency adheres to a strict code of ethics and meets the rigorous standards established by the CLLA for commercial collection agencies.

· CCAA certified member collection agencies are specialists. We recover payments quickly and amicably, communicating directly with the debtor.

· Our fees are based solely on results - not time spent on prolonged negotiations.

· CCAA certified member agencies have the knowledge and experience to achieve the best results with each account. We know how to avoid situations that may increase debtor's resistance.

· CCAA certified member agencies' expertise will often lead to immediate debtor payments or short- term re-payment schedules.

· As an independent third party, a CCAA certified member agency often can effect collection while preserving good will, thus increasing customer retention.

· We keep you advised at all stages of the collection process through regular status reports.

· Through the Commercial Law League of America, we have access to a network of the most experienced attorneys. Should negotiations reach an impasse, we can recommend and engage attorneys in the debtor's locality, who are specialists in creditor's rights.

· Employing our services frees your staff to utilize their time and energies more productively.

Selecting a collection agency based only upon the lowest fee charged may not always be the best choice. While price is always a factor in making any business decision, it should not be the sole determining factor. We all know the old adage; "You get what you pay for." This is especially true when choosing an agency. When shopping for a collection agency, you will not find bargains.

A collection agency is a business and needs to earn a profit to survive. Many agencies compensate their collectors based upon fees brought in by their efforts. A lower fee means the collector will earn less - which means they have less motivation to concentrate their efforts on lower fee accounts.

Instead of focusing on a low collection fee, a creditor will get a more accurate picture of an agency's performance by focusing on a metric called 'net back'. This is the amount of money returned to a company from accounts placed for collection. This is money that the company can use to run its business. This is true cash flow that the collection agency has injected into your business.

Often a collection agency that charges a low collection fee does not produce enough net back. The following chart provides a simple example. For this example, it is assumed that a company places an equal number of accounts with an equal dollar amount with two collection agencies. Collection Agency 1 charges 10%; Collection Agency 2 charges 20%.