It can be hard to decide when to contact a commercial debt collection agency, or whether to pursue litigation when your company has past-due customers. Consider the steps taken to collect the payment so far before you move forward. These are some questions that you might want to ask:
Did you send your invoice on time?
Is the invoice clear and complete?
Is there a written deadline that has been agreed upon?
Are you sending reminders?
Are you using a system that tracks payments and generates an A/R aging record?
Is your company a collection manager and has a policy?
Are all applicable policies and procedures clear with the customer?
Are you able to enforce credit policies?
What are the best times to call a commercial debt collector?
If you are able to answer the majority of these questions, then your company has done its due diligence. If you have any questions, need legal advice, or are unable to answer a customer’s calls, contact a professional agency.
What can a commercial debt collection agency do to make a difference?
An agency that collects commercial debt can execute aggressive, assertive, and tedious collection strategies. They also conduct thorough research on your customer’s financial and business situation and find difficult to locate debtors. A commercial debt collection agency will have negotiation expertise and can offer creative solutions to your unique company circumstances.
Faster payments
The likelihood of recovering A/R is reduced the longer an account is unpaid. Half of invoices that are paid seven months late will be fully paid. You need to implement effective and efficient recovery strategies before it is too late.
A commercial debt collection agency with experience will be able devise strategies to motivate your customer to make payment. Experts from the agency can help you to create default notices that are both firm and diplomatic using their experience. They are also skilled at coordinating phone calls, emails and other communication methods with customers. Delinquent customers are more likely than not to pay attention when a notice comes from a third-party.
No Bridges Broken
Professional commercial debt collectors understand that although a commercial customer might owe money to you, it is still important to maintain good relationships with them. You don’t want a bad reputation and to break a deal that could have been avoided with some negotiation and flexibility. Different debtors are not the same. Therefore, different strategies might be required depending on the situation of the customer and the relationship between your company and the customer. Some situations can be difficult and uncompromising. Others may require negotiation and creative problem solving such as partial forgiveness and payment arrangements.
Access to Information
Agents can also conduct credit research on debtor companies and provide other pertinent information to help determine the best course of action. An agency can conduct a comprehensive asset investigation and provide a detailed history of the debtor’s financial and payment trends. Hidden assets may also be discovered by other investigative methods that could be used to pay off the debt. This can also uncover any bankruptcy red flags.
The resources and experience of commercial debt collection agencies can track down the most difficult indebted customers. This is a collection technique known as “skip-tracing”. The internet has a wealth of information, and it’s possible to locate the person you are looking for quickly.
Legal Guidance and Protection
There are no federal laws that govern commercial debt collection. However, each state has its own regulations and professional associations like the International Association of Commercial Collectors, which hold agencies to high ethical standards. An experienced commercial debt collection agency can help you navigate the maze of legal debt collection. You should ensure that the agency you hire is a member of professional associations. They must also be familiar with your state’s commercial regulations. A collection agency can also advise you about whether to pursue a court-based solution to eventually collect the debt. Filing a lawsuit
Sometimes, litigation is the only way for the customer or the customer’s representative to make the situation urgent enough to pay. Many agencies have in-house attorneys and commercial collections agencies can refer you to them. A commercial collections attorney can help you file a legal claim and represent you in court if you decide to pursue litigation.
To make a case that is viable and get a judgment in favor of your company, you will need to present substantial evidence of the debt to court. It is a good idea to put all terms and policies in writing. Debtors can use maneuvers to avoid legal proceedings without the knowledge of a lawyer team. This can increase litigation costs or lower your standing in litigation.
Even if a judgment is favorable for a business debt you won’t always receive the money owed. Sometimes, it is necessary to use force to collect the judgment. You can use liens to attach business property, garnish their assets or obtain a writ for execution to seize business property and accounts. You can also consult a collections lawyer to help you with the collection of your judgment.
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