What You Need to Know About Debt Collection Agencies

October 16, 2019
business debt collection services

Recovering outstanding debt from your customers is a difficult but essential part of running a successful business. As a business owner, when it comes to debt collection, you have a variety of options to choose from. You could try using effective communication skills and just contact your customer directly and ask for payment since they could have forgotten or they’re going through a rough financial patch. This could go a long way towards retaining loyal customers.



However, that may not always be the case. You may be required to seek a business debt collection services agency to help you recover the money owed. In 2016 alone, a total of $78.6 million in debt was recovered by debt collection agencies. This reflects their effectiveness in debt collection as well as keeping you in business should you require their services. Here is a detailed guide to help you understand more about a debt collection agency.



How They Operate



A debt recovery agency is a company licensed to recover funds that are past due on behalf of creditors. Often, a creditor will seek their services after multiple failed attempts to recover their account receivables. It is sometimes referred to as a third party collection agency as it was not part of the original contract.



The business is required to forward the names, details, and the location of defaulters to the debt recovery agency. The agency offers business debt collection services at approximately 20-45% of the total outstanding funds they recover from a defaulter. The agency then collects the debt and turns over the funds less the commission agreed upon.



Key Roles and Responsibilities



A debt collection agency offers vast experience and knowledge about debt collection that you as a business owner may not have. They can help you correct bad debt by making account receivable collections to help you maintain a good and constant flow of income.



Aside from offering business debt collection services, a top agency such as an accounts receivable management collection agency can also monitor credit risks and can detect late payments on time as well. This could help you plan for your business when it comes to projecting the amount of capital required to sustain it.



The Debt Collection Process



Usually, the time after which a debt recovery agency is involved is from 90-180 days from the day of signing the contract between the creditor and the customer depending on the owner’s policy and personal preference. The debt collection agency then contacts the debtor using effective methods that avoid harassing or violating their rights as a consumer.



If they fail to reach the debtor with the information they have, they then proceed to use computer software and private investigators to search for the debtor’s assets, bank accounts and establish their ability to pay. They then take the case to court where a ruling is passed giving clear payment arrangements or property confiscations to enable recovery of the debt.



Debt Recovery Regulations



Any agency offering business debt collection services is bound by the Fair Debt Collection Practices Act that aims to protect both the creditor and the buyer. As such, a debt collection agency is not allowed to collect an old debt where the debtor has filed for bankruptcy or illegally seize property without a clear directive from a court.



The agency is allowed to collect a debt on which the statute of limitations has ended, which is usually between 4-6 years from the day of default. They are also allowed to contact the debtor at specific times of the day for at most 3 days a week.



Conclusion



For business owners, outsourcing the responsibility of debt collection to companies offering business debt collection services has proved to be an effective and reliable tactic in an attempt to maintain good cash flow in the business. A credible debt collection agency is dedicated to protecting the needs of a business owner in such an event.

4 Ways Account Receivable Collections Benefit Businesses

By nat rosasco • January 3, 2020
Four Reasons Account Receivable Collections is Best Left to Professionals Expert Insight An accounts receivable collection agency is staffed with professionals who know the best ways to solicit collections for delinquent accounts. This level of expertise can be impossible to come by if you’re attempting to handle collections in-house. But they can be the deciding factor between a successful recovery and a lost profit. In this way, agencies benefit businesses by having the knowledge and skills to more successfully collect owed payments. Faster Payments Accounts receivable collections agencies are also adept at getting you the payments you are owed more quickly. By employing proven techniques and by being able to negatively impact a debtor's credit score, past-due accounts are more likely to be paid by the delinquent party. In the event that payment is unable to be secured, a professional debt collection service can provide additional support that can allow you to deduct the lost amounts during taxes. Improved Documentation Account receivable collections firms are also able to provide meticulous documentation of their collection attempts. This allows you to retain proof in the event you decide to claim a tax deduction based on the lost payments. In the event of an audit, you’ll have proof of attempts to show the IRS and prove legitimacy. This documentation can also help in the event a customer decides to sue. By being able to present proof of legal and legitimate collection attempts you can absolve yourself of wrongdoing and win almost every case. Increased Focus Working with account receivable collections can also allow your own staff members to focus on their current jobs and tasks, instead of being sidetracked in an attempt to track down delinquent payments. This can cause productivity to suffer and has the potential for legal trouble if you’re unversed in the laws regarding collections. In this case, it’s best to let your staff focus on their own jobs and leave the collecting to the professionals. Professional collection agencies can benefit businesses of all sizes and of all types. Featuring many different plans, some firms will work based on a flat fee while others will work on commission. Depending on your needs, speak to a collection service about what programs they offer. Collection agencies are the best way for businesses to collect unpaid debts. If you’re tired of struggling with collections, consider turning to the professionals and experiencing these benefits first hand

How Business Debt Collection Services Benefit You

By Nick Zatta • December 31, 2019
Consumer debt rose to 3.95 trillion in September 2018. If your business is owed money in delinquent payments, you know the struggle of trying to collect the due amounts on your own. This process can be difficult for businesses and even has the potential for legal problems if not handled correctly. If your tired of trying to collection on your own, here’s why you need to hire professional business debt collection services. The Top Five Benefits of Business Debt Collection Services Legal Backing A professional debt recovery agency understands the laws involved in successful debt collection. This enables them to recover debt, or make attempts, without risking legal fall back from customers. Customers can sue for a variety of reasons, and if you don’t know the laws you could get up losing out. By allowing a debt collection agency to act on your behalf, you help protect yourself and your business from any legal fallout. Successful Recovery Business debt collection services have experience collecting debts, and working with them can significantly increase the chances of payment. This is because they know the most effective techniques to use, and also have the ability to negatively impact a debtor's credit score for up to seven years. The threat of lowered credit can sometimes be enough to make debtors seek repayment plans. Flexible Options Debt collection services are also great because they are flexible enough to work with various different business types. For instance, some can be hired for a flat fee, while others work off of commission. If you’re interested in hiring business debt collection services, speak to them about the different programs and options they offer to ensure you get the right services for your business. Documentation Records will be made of every collection attempt made by a collection service. This benefits your business by giving proof of attempts that can then be used to claim the debt as a deduction when you file taxes. These documents show the IRS that multiple legitimate attempts were made before you claimed the deduction. In the event of an audit, the IRS will be able to see these documents and won’t be able to penalize you. Faster Payments Business debt collection services also tend to make people pay faster. Due to their expertise, they are able to track down past-due clients and make the necessary collection attempts needed to get them to pay. This can be by setting up payment plans with them or by impacting their credit score. Either way, you’re more likely to get paid sooner than if you were to attempt collection on your own. Debt collections services can save businesses a lot of headaches, and if your business is struggling with delinquent payments, consider reaching out to a professional collection service and seeing that their expertise can do for you.

The Benefits of Working with a Professional Collection Agency

By Nick Zatta • December 3, 2019
In 2016, debt collection services collected a combined total of $78.5 billion for businesses who would have otherwise lost out on profit. While you might not have considered partnering with an accounts receivable collection agency before, the truth is they can be a valuable asset to business owners across the United States. If you’ve been struggling to collect delinquent payments, here are a few reasons why you should hire a collection agency. Taking the Burden Off of Your Business Calling every delinquent customer yourself, or designating members of staff to do so, can eat up a lot of time in a day. This takes the focus off of other tasks and can negatively impact interactions with other customers because they won’t get the adequate attention that they deserve. By hiring an accounts receivable collection agency you help save your staff time and leave this task to the professionals. Time saved this way can even be used working on improved credit procedures to help prevent future debtors from abusing your current system. Improves the Likelihood of Payment An accounts receivable collection agency knows the tricks of the trade. They’re trained in professional collection techniques and know-how best to get through to debtors. Debt collectors also know how to use collection laws to their advantage, protecting you from legal fallout, and better ensuring that debtors can’t try and use collection attempts against you or your business. Additionally, collection agencies are able to negatively impact the credit scores of debtors for up to seven years. The threat of this alone is often enough for people to set up payment plans. Expert Insights An account receivable collection agency can advise you on every aspect of the debt collection process. They may also be able to provide insight into financials and how best to tailor your payment protocols to promote on-time payments. Collectors know the process and can provide valuable insight that you can’t find anywhere else. Legal Protection Collection agencies are well versed in the laws and legal processes of debt collection. Without their aid, you could risk accidentally infringing on a debtor’s rights and end up in a legal battle. Additionally, if you’re forced to go to court over an uncollected debt, a debt collection agency will be able to provide documentation and proof of lawful collection attempts. This documentation also comes into play should you file the debt as a tax deduction. If audited, this documentation will serve as proof that attempts were made before you claimed the deduction. Furthermore, if you do decide to take a collection claim to court, a collection agency can take care of most of the process for you. In some instances, they will even provide their own lawyers to represent your claim. This not only takes a great deal of the burden off of you and your company, but it can result in a great chance of success overall. If your company is struggling with unpaid debts, consider these benefits and contact an accounts receivable collection agency near you. The longer you hold off the less likely it is that the debt will be collected. If you’ve got outstanding accounts that are delinquent more than 90 days, now is the time to side with the professionals.
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