Header Ads

Complete Guide to Commercial Debt Recovery Process


While there are different types of debt collection agencies, there are primarily two types of debt; consumer debt, and commercial debt. The difference between the two is paramount because each debt collection on these accounts receivables will come with an entirely different set of restrictions, and will have a completely different collection methodology. 

Before we dive into the recovery process of commercial debt, it is vital that you first understand the distinction between commercial and consumer debt.


What is consumer debt?

Consumer debt encompasses a broader definition, and mainly refers to the types of debts people make throughout their matters and lives. For example, taking out a car loan, a home mortgage, accumulating credit card debt, outstanding medical bills, etc. are all forms of consumer debt. The accounts receivables for consumer debts come under a different set of regulations in terms of how the debt is collected and how the process is performed.

In addition, the body regulating consumer debt is the FTC (Federal Trade Commission) and the FDCPA (Fair Debt Collections Practices Act). These government entities regulate and provide the mandatory guidelines important for debt collection agencies to follow when collecting outstanding amounts from individuals.

What is commercial debt?

Commercial debt is entirely separate from consumer debt collection. It is comparatively less specific, is governed by a subjective federal organization, and is less structured. It can be a very complicated task to navigate through commercial debt, especially when the guidelines on what methods debt collection agencies can or cannot use to collect a commercial debt are vague at best.

In the commercial debt recovery process, professional experience is invaluable, especially when you talk about compliance and the transparent collection of your commercial debt accounts receivables. You have to understand that everybody that is involved in the entire process of debt collection will be held accountable should there be any legal complications or scrutiny.

That is precisely why it is a good idea to opt for third-party collaboration for your accounts receivables management and delinquent accounts. 

The process of collection

Commercial debt collection organizations mainly focus on process-based implementations that are based on the requirements of the client as well as their liquidity. The process also factors in the cooperation of the debtor. You have to understand that the process is a bit time-intensive, and if the delinquent account gets older, the more difficult or near impossible it will become to recover the debt.
That is why it is so important to keep track of your accounts, receivables, and manage your debt collection promptly so that they are easier to work with, maximizing the amount of money you receive from the debtor. In light of the matter, this post sheds light on some of the integral elements you should practice when it comes to recovering the commercial debt.

A systematic guide to the receiving commercial debt

Identification

First things first, you have to identify all your delinquent accounts and get in touch with a credible collection agency you can collaborate with to get your hard-earned revenue back. As mentioned earlier, it will work for your benefit if you select a debt collection agency that specialized and is geared towards the industry you work in.

The collection agency you partner with will then sift through your delinquent accounts, gather other information focused on your terms of payment, and will review all correspondence between you and the debtor.

Contacting the debtor

In phase two, your agency will seek contact with the debtor, and they can do that via email, fax, phone, etc. The point is to exhaust all means of contact to get in touch with the debtor. This indicates two things, the professionalism, and experience of the commercial debt collector and your seriousness to pursue the debt and get paid in full. It sends a message that you will enforce all your legal rights to get your lost revenue back. 

After contact is made, the debtor will have a crisp understand of the urgency of the situation and his legal obligation to pay the money they owe you. Also, the collection agency will liaison to settle any disputes between your company and the debtor. They will also seek to make the necessary arrangements for all the payments and will try to obtain a written or oral commitment of the debtor.

They will make it abundantly clear how much the debtor owes as well as the legal enforcement options they can utilize should the debtor refuse not to pay or not cooperate at all.

Resolution

Should the debtor cooperate with the agency, the matter will be resolved in a short time. However, if the debtor decides not to play ball - that too after the collection agency provides them with a window of time to make the payments - let's assume 70 days - then it is time to issue a formal court order for cease and desist. This is when you are going to take legal action against the delinquent account, and your attorney will be involved.

Favorable judgment

If you are awarded the lawsuit, it is still too early to celebrate because you are still going to have to wait for the payment. After the court order, the collection agency will analyze and evaluate the assets the debtor has. They will develop an initial bank lien with a debtor or issue a garnishment order in order to satisfy the court order. 

The bottom line

When it comes to commercial debt collection, there is no way you will be able to take out the time to pursue multiple delinquent accounts without compromising your company's primary tasks. That is essentially why it is so important to collaborate with an experienced collection agency that can diligently comb through the situation and retrieve your lost revenue.


Author Bio

Audrey Throne is the mother of a 3-year old and a professional blogger by choice. Throne is passionate about lifestyle, business, automotive, technology and management and blogs frequently on these topics.


Find her on Twitter: @audrey_throne.
Powered by Blogger.