Exploring Collection Agency Bonds, Their Importance And Costs
There is truly an abundance of individuals within the fine country of Canada that have
fallen into debt. Many of these individuals will work diligently to pay off their debts and clear their good name. Others will ignore their debts and force the owed company to take action and attempt to collect the debt. Many companies will utilize the services of a collection agency, in order to achieve this task. With that being said, there is definitely a market for collection agencies, within Canada. If you wish to make money in this industry, you will need to learn about Collection Agency Bonds, so you can operate legally.
What Is A Collection Agency Bond?
As a collection agent, it is your duty to contact businesses and consumers on behalf of another company. When doing so, you will attempt to convince the company or consumer to begin paying off their debts. With this in mind, individuals that work as collection agents actually have a lot of responsibilities on their shoulders. This is why many Canadian provinces require collections agencies to obtain the appropriate bonds. Without this bond, you will not be able to carry out your duties legally and will be unable to generate an income.
What Is Covered?
Now, you should learn precisely what the collection agency bond would cover. The truth of the matter is that this type of bond is capable of protecting both sides of the transaction. Not only does it protect the company, which is collecting their debt, but also it helps to protect the indebted. This is the case, because the bond guarantees that your entity will maintain proper accounting for all funds, which have been received from indebted individuals. At the same time, the bond confirms that the collection agent will disperse the money to the proper clients in a timely manner.
If the collection agency fails to fulfill these duties in a timely manner, they can be held liable and could lose out substantially.
How Much Will It Cost To Obtain A Collection Agency Bond?
Although the bond is undoubtedly a requirement and should be obtained regardless, it is hard not to examine the price. To make matters somewhat complex, prices can be very diverse and may differ from one agency to the next. You should also know that you’d be required to pay a premium on an annual basis, in order to maintain the validity of your bond. Although a handful of factors can play a role in the determination of the cost, the most impactful is generally the owner’s personal credit score.
When attempting to obtain your collection agency bond, the surety company will analyze your credit score carefully. If your credit score is really bad, the surety will most likely deem you to be a high risk. This will result in more expensive rates, which could range from 5% to 15% of the final bond cost. On the flip side, if you’ve managed to maintain a decent credit score, the surety company will most likely do you a favor and provide you with a more generous rate.
Business owners with good credit scores will most likely be charged 1 to 3% of the final bond amount. Just remember that it is possible to obtain a debt collector bond, regardless of your credit score. Those with bad scores will be required to pay a bit more, but they will not be left out in the cold.
How To Acquire Your Collection Agency Bond
If you wish to make money as a debt collector, you will need to become licensed and bonded by getting the appropriate license bond, which in this case is the collection agency bond. In order to do this, you will need to proceed through the collect agency bonding process. The majority of consumers have formed the misconception that this process is incredibly complex, but it is actually straightforward. Once you’re ready to begin, you will want to fill out the application and submit it. The application can be completed online and should be finished within a few minutes. After it has been submitted, you will need to wait, until you receive your premium quote.
If the quote provided is favorable enough, you can agree to the terms, sign the agreement and make your first payment. After this has been completed, you will need to wait a few days. The Collection Agency Bond will be delivered to your mailbox, after this duration has passed.
Working Through Claims
Remember that the bond is not just a piece of paper. It is an agreement to your clients, as well as the debtors. If these individuals feel that you’ve done them wrong, they can make contact with the surety company and file a claim against your business. In order to prevent this from occurring, you need to do your best to maintain accurate records and hand over the money in a timely manner. If you do end up in a complaint situation, you will want to try to negotiate with the debtor or company to prevent it from escalating. Communication can truly go a long way and could keep the matter out of the hands of the surety company.
You should know that these surety bonds do not protect your agency so avoiding claims is absolutely pertinent.
Get Covered Now
If you’re ready to begin making money as a collection agency, you will want to obtain the associated bond immediately. Now that you’ve scoured through the information above, you should be able to do that, without any difficulty.