Before we go any further, we should start by learning the difference between contingency collection and the other forms of liability collection. I. What Is Massachusetts Contingency Collection
It’s a term used to refer to a collection company tasked with recovering money for its client. Here, the fees payable to the collection lawyer are grounded on the percentage agreed upon between the parties. In short, the attorney will take a certain percentage of the amount recovered, which means a client won’t pay if a collection doesn’t happen. It means the client doesn’t have to worry about making payments to the Massachusetts debt collection firm if they don’t make any collection. On the other hand, the collection agency will become motivated to collect the money owed to their client.II. A Fee Set Percentage for Debt Collection – What Is It?
It’s a type of dues collection where the law firm and its client agree on the fee beforehand. Often, the percentage charged will depend on the amount of money owed by the defaulter. The age of the account may also affect the percentage charged. The bottom line is that the small claims Boston firm won’t get paid if it doesn’t make a collection.
Why Use the Services of a Massachusetts Small Claims Agency?
Hiring a contingency collection lawyer makes a lot of financial sense when you want to get paid for services rendered. Typically, it would be best to do so when dealing with a bill older than 120 days. The attorney will go after the defaulting borrower with letters, calls, and negotiations. If this fails, the last course of action is to file legal action. All these tactics will apply when the attorneys attempt to recover your money. Considering that the law firm will only get paid after they have recovered the bill, they will work hard to ensure they have obtained it. It’s one of the greatest benefits of retaining the services of a collection attorney.
The ABCs Attached to Contingent Fees
There are tons of factors to keep in mind when hiring Massachusetts debt-collection attorneys. You can’t just hire the first firm you come across and task it with recovering a bill from a delinquent client. Although you’ll probably want to consider factors such as the lawyer’s location and experience, two elements should always take priority:
• Collection rates
• Contingency fees
As simple as these two factors may appear, they often tend to work in opposite directions. It’s what makes it harder for business owners to find a law firm that can get things done. To make it easier for you to understand the two, read on to learn about both sides of the coin.
The collection rate refers to the track record a Massachusetts commercial collection lawyer has recorded since they got into this line of work. You can calculate the rate by dividing the total number of successful collections against attempted collections. When evaluating the collection rate, it’s recommended that you also take the context into account. For example: An attorney attempting a challenging amount of collections will typically end up with a lower recovery rate than a firm that cherry-picks its collection options. In such a scenario, the first attorney will have a low collection rate despite recording excellent results on a per-collection basis.
Most Boston debt-collection lawyers prefer to use this model when billing their customers. As was alluded to earlier, the client and the attorney must agree beforehand that the firm will retain a certain percentage of what it collects. Keeping in mind what was mentioned regarding collection rates, the contingency fees can, in some cases, provide highly misleading numbers. It’s why many attorneys state that it’s a mistake for clients to choose a collection agency based solely on the contingency fees. The reason is that the agreed-upon percentage won’t matter if the firm doesn’t collect the outstanding bill.
Is It Possible to Find a Middle Ground?
The above information can prove confusing, especially for someone looking to work with a debt collection Massachusetts firm for the first time. What you need to take away from all this is that both the contingency fees and collection rates matter. They’re two factors that you should consider during the hiring process. In most cases, the best agency for your company will often be found sitting somewhere in the middle. Ensure that the firm doesn’t take advantage of you on either front. Most importantly, don’t harbor unrealistic expectations in terms of numbers, more so if you expect the attorney to produce results.
How Much Will Your Business Have to Pay as Collection Fees?
Here is something you should never forget: even businesses with skyrocketing sales still need to monitor their accounts receivable. Paying close attention to the receivables will make it easier for your company to reclaim any revenue it may have lost. Lost revenue occurs when clients fail to pay their bills on the agreed-upon date. While some businesses can afford to write off such bills in the hope of receiving better tax treatments, small businesses simply can’t afford to do so. Many of these businesses operate on a cash account, so they won’t get a tax benefit for writing off a bad account. Price is among the things to consider when hiring a Massachusetts debt collection attorney. Your goal is to recover as much of the amount owed as possible while paying the lowest cost possible.