Everything You Need To Know About Commercial Debt Recovery

You are a small business owner who has been striving hard to serve your customers, providing them the right service or product they need, however when the time comes to get paid, they simply give excuses and others ignore you completely. This is the irony when you are running your own private business – dealing with overdue accounts receivable.

Small businesses are incredibly crucial to the economy of the United States. They do not have enough cushion not to get paid by several customers. They cannot continue with their normal business activities if too many accounts receivable become overdue.

Many businesses and medical practices take their past due accounts very lightly. Instead of transferring accounts to a professional collection agency in a timely manner, they depend on internal staff to recover money. Internal staff is never too serious or well-trained to recover money from those accounts where a customer does not pay after a few initial reminders. Debt collection was never a part of their job profile. The most common reasons why businesses do not transfer an account to a collection agency is fear; the fear of losing customers, fear of damaging the reputation and sharing money with a collection agency. They eventually lose the money entirely.

Most companies tap their business line of credit or focus on getting new customers only. Ignoring unpaid bills is the starting point of destruction for any company. Eventually, they struggle to pay off the loan taken from the bank.

Commercial debt recovery companies come into play to get your money back from business clients who do not fulfill their obligations to pay you on time. We are referring to the B2B unpaid debt. Commercial collection agencies can help you get your money back.

What Is Commercial Debt Recovery?

A commercial debt recovery agency is a company that deals with the recovery of loans that are not being paid back by other companies or business entities. A Commercial collection agency will systematically recover money for you using an approach you would have probably never imagined. They will perform several credit checks to know if your client even has resources to pay and if they have other creditors like you. They also involve an attorney to take legal action if no other resort is left.

How Do They Work?

Getting a loan back from a company is quite different from getting a loan back from a single person. There are many legal complications for a collection agency to recover money from a company. The good news is that the staff of collection agencies are aware of these laws. Compliance with federal and state laws is one of their core expertise.

They go over all the necessary channels and controls to ensure that the recovery process is legal and ethically executed. A debt collector can never make threats. Threats or harassment is against debt collection laws. Although FDCPA applies to consumer collections, commercial debt collections are also subjected to a different set of rules.

The Process of Debt Collection

Each collection agency has a specialty. There are agencies that deal in commercial debt, some deal in medical debt and some collection agencies serve dentists called the dental debt collection agency. Make sure you assign the debt to the right type of collection agency.

  • Step 1: The process starts when you notify the collection agency of the non-payment.
  • Step 2: You provide them with all the legal documents so that they can study it and plan the next necessary action.
  • Step 3: Collection agencies liaison with the non-payers and recover your unpaid money, in mutually agreeable transactions.
  • Step 4: They give you back your money after deducting their fees.

How Much Will It Cost?

Every case is different and their fees depend on the actions that the recovery team has to take to ensure that you get your money back. Fees can vary between 20% to 45%, however it all depends on how much effort is required to recover the debt. Accounts with higher balances are charged a lower fees. Older account are subjected to higher fees.

A good collection agency is like your business partner. Companies which use them regularly, recover a large percentage of debt which would have gone unpaid otherwise.