Selecting the right third-party vendor is critical for any organization. Making the wrong decision can led to many long-term negative consequences for your firm. The contracts or agreements that you will enter into with these service providers can last several years and will often require a long-term commitment on your part. This makes the selection process especially important. So how can your organization make sure the procurement process is an open and transparent process? How can you ensure your selection process will lead to a positive outcome?
Most industries will make purchasing decisions by issuing a Request for Proposal (RFP). There are many benefits of using an RFP process.
- Offers a level playing field.
- Enables focus on specific criteria
- Offers the potential to discover new vendors.
Using an RFP process also allows the procurement process to limit interactions with vendors prior to their submissions and typically any vendor is allowed to submit a proposal. This helps create a competitive and open evaluation process of potential service provider for your organization. While this is a standard procurement practice for many different industries, when writing an RFP, the challenge is knowing what items or value-added services you will need to focus on and gather in the evaluation process. For example, in the collection industry where it is a service-based offering and not a commodity, solely looking at lowest price can often lead to picking the wrong vendor. In many cases it is not an apples-to-apples comparison when only comparing cost.
As a resource to assist with the process, Integral Recoveries has identified some specific mistakes that your organization should avoid when putting together an RFP.
1) Evaluating Potential Vendors Solely on Price – While price is an important differentiator, it should not be the main factor in selecting a collection vendor. Why? In the collection industry, low price often leads to low rate of return. Integral Recoveries has put together a detailed explanation of “Net Back Dollars” and why it is important in selecting the right collection agency partner. It can be found on our website Learn More About Net Back. It might be in the organizations best interest to set the price they would like to pay for this service in the RFP. With price being constant, this will allow you to focus on other important value-added services that a collection agency can provide to your organization.
2) Don’t Disqualify Potentially Good Vendors Based on their Size – Avoid setting stringent qualifications or requirements that can not be met by many vendors. Why potentially disqualify good candidates from the RFP process? For example, only looking at vendors who have a certain annual revenue or a minimum employee head count. A large firm does not always equate to superior performance as well as customer service. In fact, many smaller firms that have fewer clients to service and maintain could provide you with better customer service and a higher rate of return. Integral Recoveries has put together a list of items to help you find the right collection agency that can be found on our website. Finding the Right Collection Agency
3) Limiting Potential Vendors Based on their Location – Location of the collection agency should not be a primary factor that is used for consideration and selection. Most collection agencies do have the ability to operate in other states. Ask if they are licensed and able to collection nationally. Limiting vendors solely based on location can often disqualify potentially good candidates. Remember the goal of an RFP is to create an open and competitive process.
4) Implications of Subcontracting or Having Off-Shore Centers – Firms subcontract or have off-shore call centers to reduce overhead costs. If you use a vendor that often utilizes a subcontractor, you have no direct control over the quality of subcontractors’ work which might lead to inferior performance. Does the vendor operate any call centers that are located outside the county? If so, this could create potential issues for your organization such as bad customer service, increasing number of customer complaints or lack of accountability.
5) Not Focusing on a Vendors Compliance and Client Retention Policies – It is important to find out if the potential vendor operates in a complaint manner. Will their services be performed in accordance with all federal and state laws and regulations? Does the collection agency maintain an “A+” rating and is an accredited member of the Better Business Bureau? Are they committed to resolve customer complaints or disputes in a timely manner? Have they had any court-litigated actions filed against them or have they had any clients terminate their services early? These are all factors that should be considered when looking at different collection agencies and part of any RFP selection process.
Integral Recoveries has been providing effective accounts receivable management solutions since 1995. Our mission is to resolve past due accounts utilizing state of the art information gathering, effective negotiations and persistence. We take a strategic approach to debt recovery and every account is researched thoroughly by experienced professionals in order to take the most effective course of action. Contact us if you would like to learn more about our services.