Learning More About Contingent Collections
Today’s contribution is authored by Ms. Shannon Dooley, NCS Collection Services Group
What is a contingent collection?
You may be asking yourself what is meant by a contingent collection. Well, a contingent collection means you only pay a contingency fee on the amount of money that is collected. This collection can be secured or unsecured, and worked in-house by NCS or through an attorney that is part of the NCS attorney network local to your debtor.
How does it work?
Once we receive the commercial collection placement and supporting documents from you, we will complete research on the debtor to locate alternative addresses, phone numbers, and contacts. From there, we will send the initial demand letter to the debtor and call them in an attempt to collect the money owed or to help resolve a dispute should there be one. If the debtor agrees the debt is owed, we may also work with them to set up a payment plan that meets your approval. If there is a lien or bond claim in place and the debtor is requesting a release, NCS can act as an exchange service. Throughout the process, NCS will keep your dedicated collections contact apprised of all progress as the debt is pursued.
I’m Just Going to Write-Off the Debt
Now you may be asking yourself, why would I not just write off the bad debt? Writing off bad debt is not as simple as just that bad debt; it generally costs a great deal more to recover that lost revenue. For example, if you write off $50,000 at a 30% margin you would have to generate over $166,000 in additional sales to recover that lost profit. And since a contingent collection placement typically does not cost you anything unless money is recovered, the question you should be asking is: Why wouldn’t I try a collection placement before just writing off the debt?