Most businesses stay with a collection agency long after they have stopped being happy with it. The recoveries are slower than they should be, the reporting is thin, nobody returns calls, and the same accounts have been "in progress" for a year. Changing agencies feels like a hassle, and there is a worry that moving files will make things worse.
It doesn't have to. Moving to a new agency is a routine part of managing receivables, and when it is done in the right order, accounts come out of it with more momentum, not less. The risk is not in switching. It is in switching carelessly, without a full inventory of what you placed, what was collected, and which accounts are at a delicate stage.
This article covers when a change makes sense, what to sort out with your current agency first, and how to move accounts so that nothing slips through the gap.
Signs it is time to change agencies
Every collection relationship has accounts that never pay. That alone is not a reason to switch. The reasons worth acting on are patterns:
You don't know what is happening on your accounts. If you have to chase your agency for a status update, or the reports don't show contact attempts, promises and payments account by account, you can't manage your receivables.
Recoveries have dropped with no explanation. Results vary with the economy and the age of what you place, but a steady decline that nobody can explain deserves a closer look.
Fresh accounts are going nowhere. Accounts placed early should be the easiest to collect. If they are sitting idle, the problem is the effort being put in, not the debtors.
Funds are slow to arrive or hard to reconcile. You should always be able to match what the agency collected to what it paid you, and know when to expect it.
The agency can't take accounts further. When debtors ignore calls and letters, you need a firm that can move to legal action and enforcement in the right jurisdiction, not one that closes the file.
Your customer relationships are suffering. An agency that is heavy-handed with customers you want to keep is costing you more than its fee.
Read your agreement before you do anything
Your collection agreement sets the terms for ending the relationship, and it is the first thing to check. Look for:
Notice requirements. How much notice you have to give, and in what form, to end the agreement or recall accounts.
Fees on recalled accounts. Some agreements charge a fee when an account is withdrawn, or claim a fee on money paid after a recall if the agency's work led to the payment. Know where you stand before you move anything.
Accounts in legal action. Files where a claim has been filed, or where judgment has been obtained and enforcement is under way, often have their own terms, because outside lawyers and court steps are involved.
Payment arrangements. How payments on accounts under an active payment plan will be handled during the change.
If the agreement is silent on any of these, raise them in writing with the agency before you give notice. Questions are much easier to settle at the start than halfway through.
Get a complete inventory first
The most common mistake in a switch is moving accounts before you know exactly what you have. Before you give notice, ask your current agency for a full report on every account you have placed. It should show:
the debtor's legal name and contact details
the original balance placed and the date it was placed
every payment received, every fee charged, and the balance still owing
the current status: no contact, in negotiation, on a payment plan, disputed, in legal action, or closed
notes on promises to pay, disputes raised and the last contact with the debtor
Check that report against your own records. Every account you placed should be on it, and every payment the agency received should match what it has paid you. Sort out any differences before the files move, while the agency that handled the accounts is still responsible for them.
Settle the money before you move the files
Ask for a final statement and payment of any funds collected but not yet paid out to you. In Alberta, licensed collection agencies must hold the money they collect for clients in a trust account, separate from their own operating funds. That money is yours, and it should be paid out according to your agreement, not held back while the relationship winds down.
Getting this done before the transfer keeps the accounting clean. It gives you one clear line between what the old agency collected and what the new one collects, and it prevents arguments later about who collected which payment.
Sort accounts by urgency
Not every account carries the same risk when it changes hands. Move them in order:
Accounts on active payment plans come first. A debtor who is paying reliably should not notice the change, apart from being told where to send payments. Make sure the new agency has the terms of the plan and the payment history before the next instalment is due, and that the debtor gets clear, written instructions. A missed payment during a handover is the easiest way for a working plan to fall apart.
Accounts close to a limitation deadline come second. In Alberta, the basic limitation period is generally two years from when the claim was discovered. Any account approaching that line should be flagged at transfer so the new agency can act right away, whether that means getting a written acknowledgment of the debt or filing a claim.
Accounts in legal action need their own plan. If a claim is underway or a judgment is being enforced, work out with both agencies, and any lawyers involved, who will carry the file forward. Court deadlines and registered writs don't wait for a change of agency.
Everything else follows. Older accounts with little activity can move in bulk, but they should still arrive with their full history so the new agency is not starting from scratch.
What to send the new agency
A new agency can only work as fast as the information it receives. For each account, send everything that proves the debt and everything that shows what has happened since:
the credit application, contracts and any personal guarantees
all unpaid invoices and a reconciled statement of account
proof of delivery or completion
the old agency's notes and payment history on the account
written acknowledgments of the debt, payment agreements and any disputes raised
The history matters as much as the original documents. A debtor who has already promised to pay three times and broken each promise should be handled very differently from one who was never reached.
Telling debtors about the change
Debtors should hear clearly, and in writing, who is now collecting and where to send payments. Your new agency will normally handle this, but confirm the wording and the timing. Mixed messages give a debtor an excuse to stop paying. A short, factual notice from a properly identified, licensed agency closes that gap.
Make sure your own staff know about the change too. If a debtor calls you directly, your team should point them to the new agency and let the agency know about the contact.
Choosing the next agency
The reasons you are leaving are the best guide to choosing who comes next. If reporting was the problem, ask to see a sample report. If legal follow-through was missing, ask how the agency handles accounts that need court action and enforcement, and in which provinces. If customer relationships suffered, ask how they approach debtors you want to keep.
In every case, confirm the agency is licensed in your province, read its collection agreement before you sign it, and ask how and when collected money is paid out to clients.
Frequently asked questions
Can I move my accounts to a different collection agency?
Usually, yes. Your collection agreement sets the terms, including notice periods and any fees on recalled accounts. Read it, give written notice and get a full inventory and final accounting before the files move.
Will I owe my old agency a fee on accounts I move?
That depends on your agreement. Some charge a fee on recalled accounts or on payments that result from the agency's earlier work. Check the terms before you give notice.
What happens to debtors on payment plans when I switch?
The plan should carry on. Send the new agency the plan terms and payment history before the next instalment is due, and make sure the debtor gets written instructions about where to pay.
Does switching agencies affect the limitation period?
No. The limitation period keeps running no matter who is collecting. In Alberta it is generally two years from when the claim was discovered, so accounts nearing that deadline should be flagged for immediate action.
What should I ask a new collection agency before placing accounts?
Confirm it is licensed in your province, ask how it reports on accounts, how it handles legal action and enforcement, and how and when it pays out the money it collects for clients.
The bottom line
Changing collection agencies is a business decision, not a crisis. The businesses that do it well treat it as a handover with a checklist. They take a full inventory, settle the money, move the urgent files first and give the new agency the complete history of every account.
Done that way, a switch gives stalled accounts a fresh start, without losing a payment, a deadline or a debtor in the move.