Commercial debt collections

One of the primary causes of business failure is bad debts. Now, a debtor is basically an individual or company that owes money to another person or company, usually known as the creditor. Many cases have been reported of debtors failing to hit payment deadlines or totally defaulting to make payments to creditors. There are several factors that may contribute to debtors failing to honor their deals which include unforeseen unfortunate events such as job loss, lack of proper financial planning and disagreements with creditors over the contract. Whatever the case, a debt is still a debt and it ought to be paid.

As a creditor, there are some of the few indicators that will automatically signal to you that your debtor has no plan to pay you soon. First, you will realize that the debtor will occasionally try to change the terms of your original deal. With time, this quest progresses into simple complains about your business. Then you will notice that the debtor starts avoiding documentation of any subsequent contract or deal. They will occasionally give falsified information and empty promises. The debtor may change the name of the business and in some extreme cases even change their contact information to make it harder for you to reach them. Whenever you attempt to contact the debtor, they will often be unavailable or hesitate to give detailed information on any enquiries you make. When you notice this peculiar behavior from your debtor, start acting fast before you lose it all.

However, with the existence of commercial debt collections agencies, you are assured of a chance to get compensation of your money. Debtor collection agencies are licensed businesses whose sole purpose is to follow up to dishonest debtors and recover back the monies owed for a small percentage of the debt.We help extract money from debtors in a professional way and are usually an extension of the creditor company.

There are many types of debtor collection agencies, the most famous being first party and third party commercial debt collection agencies. First party collection agencies get their name from the simple fact that they are part of the original creditor company. They take part in the early stages of debt collection and hence use soft methods like trying to reason with the debtor. They are careful to maintain a good business reputation and at the same time pressure the debtor to make payments. Third party collection agencies on the other hand are a separate legal entity from the original creditor company. They are used for secondary debt collection and charge a fee for their services. However, they are only paid by the creditor company if they are successful in collection of the debts.

Sometimes, debt collection agencies buy the debts owed from creditors at a lower price and then make take the burden of pursuing the debt from the debtors at an interest. This is a very important and useful strep especially for the original creditor company since its saves them the trouble of having to protect their business image and reputation. The collection agency also benefits by generating a higher income from interests acquired upon payment by the debtor. This method is also effective for pressuring the debtor company even more to make payments since collection agencies are legally protected by the law.

There are rules set in place through legislation purposely to govern how debt collection is done. The rules are particularly meant to limit harassment of debtors by creditors and collection agencies through threats and also to prohibit the debtors from providing falsified information or withhold relevant details.