Business debt collection agency has always been the main source of income for most business entities. This is mainly because they are in need of funds and cannot afford to lose their clients. The traditional way of collecting for commercial debt collection service is up front fee; no recovery, no risk. However, it is recommended that commercial debt collection agencies should break old tradition and provide other fee structures.
Firms should also vary fees based on customer needs; i.e., non-contingential, contingent, hourly and/or per-call-period. For example, if a customer contacts the company with a simple problem like payment issues, a no recovery option might be a good option.
If the customer is calling in after the collection agency has already contacted the business and has been informed of a default on the account, a non-consequential fee could be more effective. If the customer is calling in after the company has made a determination of the status of the account, a contingent fee may be useful. If the company is not sure whether the client will have payment problems, then the company may wish to collect a large non-recourse fee. A no recovery fee is usually for accounts where the company is confident that the customer is on the verge of foreclosure, repossession, or bankruptcy.
Once the account is cleared, collection agents will contact the clients. In some cases, the collection agent will send a representative to visit the client at home. This will usually include a pre-recorded message informing the client about the situation, informing him/her of the company’s policies, and then asking for payment.
Collection agents will usually try to collect as much as possible from the customer. However, they can and will try to negotiate with the clients in order to get an acceptable amount for the client.
Many consumers who owe money to creditors or businesses will turn to commercial debt collection service for assistance, particularly when their credit score is less than perfect. If you are facing the same situation, it is better to seek help from a professional debt collection agency, because the credit rating you will need is lower than what many credit agencies require.
Businesses can take advantage of this lower rating by getting a low interest rate. Even though it is not the best situation for the business, most companies make an effort to settle unsecured debts with their clients rather than filing a lawsuit. If your debt is large, most companies would prefer to negotiate, and would pay a lower interest rate than to incur legal fees.
Commercial debt collection agencies have their own set of laws that govern the collection of debts; you should find out if these laws apply to your case before using them. If they are not, you may be in violation of the Fair Debt Collection Act.
Card debt collections are very common, especially with companies who are on the verge of bankruptcy. Because credit cards are so easy to obtain, they pose a high risk to business, especially in the event of bankruptcy.