People often believe that businesses are greedy, seeking to prey on customers to fatten their wallets. However, any business owner will tell you that corporate revenue doesn’t all go to the men at the top. It pays bills, debts, and salaries for all the workers.
For this reason, if you run a business and your clients aren’t paying their bills on time, you need a way to collect that money. However, you also have a busy schedule. It may be tough to take time out of your day to hound customers.
In that case, a commercial debt collection agency could be what you need! A debt collection agency lets you sit back and focus on your work priorities while they track down the money you need.
Different industries may use debt collection in various ways. In this article, we’ll give you a rundown of the essential information about debt collection agencies. Let’s get started right away!
How Commercial Debt Collection Works
When discussing debt collection, there are essentially two broad categories: consumer and commercial debt collection. The commercial type deals with B2B creditors that need other businesses to pay off a debt they have to their company.
Instead of pursuing this collection themselves, businesses often choose to hire a debt collection agency. These groups use several methods and tools to get the money they need for their accounts.
One popular method is to send certified demand letters. This approach is often the first one used by a debt collector to contact a business. This letter gives a balance statement, explains how much money to pay, and the due date for the payment.
Sometimes a business may respond and inform a collector that they’ve fallen on hard times. In that case, you can give your debt collection agency permission to negotiate a payment schedule. With this method, you’ll receive the money you need in scheduled increments.
Finally, debt collectors often use routine phone calls to contact businesses. This approach is the most common way for agencies to reach out to debtors and remind them of their payments. Typically, they resort to letters to give themselves an advantage in the event of a lawsuit.
How Do Collectors Pursue Debt?
As a business owner hiring a debt collection agency, you may worry about the Fair Debt Collection Practices Act (FDCPA). Does this provision protect your debtors?
In short, the answer is no. This act only applies to consumers, not commercial debt. As such, collectors have some freedom in how they pursue a debt.
They can contact debtors through several means, such as email, phone, or physical mail. They can also call the company phone number several times throughout the business day.
Moreover, unless you live in Texas, your debt collector has no limits in how long they can pursue your debt. Federal law doesn’t recognize a statute of limitations on debt.
As a result, you can continue to pursue your debtors until they pay you your dues. The only thing that could prevent you from doing so is if you go out of business.
However, while the law may not impose certain limits, some do exist. For example, FDCPA does not prevent debt collectors from calling a debtor at home. While this may not be illegal, the debtor could file a harassment lawsuit against creditors who call too frequently.
Furthermore, the law does recognize that agencies may use fraudulent collection practices. If an agency does so, it can have severe consequences for them.
How Do Collection Agencies Make a Profit?
You may wonder, “What’s in it for the debt collection agency?” If so, you’ve got a shrewd eye.
Collection agencies can be relentless allies in helping businesses receive the money they’re owed. However, they don’t do the work pro bono. Instead, they make a profit in one of two ways.
One method these agencies use to turn a profit is purchasing packages of debt. These “packages” are the accounts that are past due held by a company. They typically offer a fraction of the total debt’s value to the creditor when they do so.
However, in return, the creditor can write the debt off their books. Since their clients no longer owe them money, they can focus on work and forget about the debt.
The other way for debt collection agencies to make money is by relentlessly hounding the debtors without charging the creditor. When they finally receive the money from the debtor, they get to keep a portion for themselves. They remit the rest to the creditor, who can strike the debt from his books.
When to Hire a Medical Debt Collection Agency
Various debt collection agencies specialize in particular industries. For example, if you run a medical company, you may face several circumstances that make a medical debt collector necessary.
A smaller medical office relies on receiving payment at their appointed times. Otherwise, it can interrupt their ability to purchase needed equipment or pay their workers.
It may be time to find a medical debt collector if you face some of the following circumstances. One of the most damaging circumstances is when many bills become long overdue. Bills that run longer than 90 days can cause significant problems for your office.
Another time to consider a debt collector agency is when you struggle to understand debt collection laws. The last thing you want is to face a lawsuit from debtors. Instead, contact a professional agency that knows each of these laws.
You also may not have enough staff on hand to do the job. Most medical facilities focus on hiring doctors and nurses. Since these are such high-demand jobs, you may not have time to track down late payments.
Where to Turn for Debt Collection
If you need commercial debt collection, don’t run yourself ragged trying to track down your debt. Instead, consider hiring our services! We at FFCC offer debt collection services for several industries.
If you need someone to collect your money, see if we service your industry. If so, contact us today! We have an excellent track record and can help you get the cash you need.