What is the primary role of a collection agency?

The primary role of a collection agency is to collect some or all of the amount due for a fee or percentage of the recovery. Collection agencies are contracted by creditors, including healthcare providers, to recover outstanding debts. Their primary function is to communicate with the debtor, negotiate repayment terms, and, when necessary, employ different collection strategies to encourage payment.

This role is critical in helping businesses manage their cash flow by recovering funds that would otherwise remain unpaid, and it often involves the use of various methods for engaging debtors. The fee or percentage taken by the agency serves as compensation for the services they provide, facilitating the collection process effectively.

Individuals working with a collection agency typically do so only after efforts by the original creditor have failed to secure payment. Other options listed may certainly occur in the debt recovery process, but they do not represent the fundamental function of a collection agency in the same manner as collecting debt for a fee does.