Did you know there are over 6,000 debt collection agencies in the United States? When it comes to business-to-business debt collection, there are a lot of factors to consider before making a decision for your company.
Making the wrong decision when it comes to B2B debt collection can be costly for your business. You could end up spending more money than you need to, or worse yet, damaging your relationship with your customers.
By reading this guide, you’ll have all the information you need to make an informed decision about B2B debt collection agencies.
What is a B2B Collection Debt Company?
A B2B collection debt company is a company that specializes in collecting debts owed by businesses. These companies usually work with businesses of all sizes, from small businesses to large corporations.
B2B collection debt companies will typically offer a variety of services, such as:
Sending demand letters: A demand letter is the first step in the collection process. It’s a formal notice from the collection agency informing the business that they owe a debt and demanding that they pay it within a certain time frame.
Making phone calls to the businesses that owe you money: The collection agency will make repeated phone calls to the business in an attempt to collect the debt. It’s important to note that the collection agency can only call during certain hours and they are not allowed to harass or threaten the business.
Negotiating payment plans: If the business is unable to pay the full amount of the debt, the collection agency may be able to negotiate a payment plan. This will allow the business to make smaller payments over time until the debt is paid off.
Filing lawsuits: In some cases, the collection agency may file a lawsuit against the business. This is usually a last resort, as it can be expensive and time-consuming. Filing lawsuits should only be done if all other attempts to collect the debt have failed.
Collecting on judgments: If the collection agency wins a lawsuit against the business, they will be able to collect on the judgment. This usually involves garnishing the business’s wages or putting a lien on their property.
How Do B2B Collection Debt Companies Work?
B2B collection debt companies typically work on a contingency basis, which means they only get paid if they’re able to collect the debt.
In most cases, you’ll pay the B2B collection debt company a percentage of the debt they’re able to collect. The exact percentage will vary depending on the company you use, but it’s typically between 20% and 50%.
Some B2B collection debt companies may also charge a flat fee, regardless of whether or not they’re able to collect the debt.
It’s important to understand how much you’ll be paying the B2B collection debt company before you sign any contracts. This way, you can make sure you’re not paying more than you can afford.
When Should You Use a B2B Collection Debt Company?
There are a few different situations when it might make sense to use a B2B collection debt company:
- You don’t have the time or resources to collect the debt yourself.
- You’re not comfortable collecting the debt yourself.
- You’ve tried to collect the debt yourself but haven’t been successful.
- The business that owes you money is located in a different state.
What Are the Benefits of Using a B2B Collection Debt Company?
There are a few key benefits of using a B2B collection debt company, such as:
- You don’t have to spend time trying to collect the debt yourself. This can be a huge relief for business owners who don’t have the time or energy to deal with collections.
- B2B collection agencies have experience collecting debts from businesses. They know the ins and outs of the process, and they may be able to get your money faster than you could on your own.
- You don’t have to worry about damaging your relationship with the business that owes you money. Collection agencies are used to dealing with businesses that refuse to pay, so they know how to handle the situation without damaging your relationship.
How to Choose a B2B Collection Debt Company
If you’ve decided that using a B2B collection debt company is the right choice for you, there are a few things you should look for when choosing one:
- Make sure the company is licensed and bonded. This will protect you in case the collection agency doesn’t hold up their end of the deal.
- Ask about the company’s success rate. You should also ask for references from past clients.
- Make sure you understand the contingency fee before you sign any contracts. The last thing you want is to be surprised by a high fee after the collection agency has already started working.
- Ask about the company’s policies and procedures. You should make sure you’re comfortable with the way they do business before you sign any contracts.
Do You Need a Lawyer?
If you’re considering using a B2B collection debt company, you may want to speak with an experienced business lawyer in your area. A lawyer can help you understand your legal rights and options, and they can help you choose the best course of action for your situation.
Tips for Working with a B2B Debt Collector
There are a few things you should keep in mind when working with any type of debt collector, but they are especially important when working with a business-to-business debt collection company.
1. Make sure you know how much the debt is and when it is due. This will help you determine if the debt is worth pursuing and how much you can expect to receive from the collector.
2. Ask for a payment plan. If the debtor is unable to pay the full amount, you may be able to work out a payment plan. This is often the best way to recoup your losses without damaging your relationship with the debtor.
3. Get everything in writing. Any agreement you make with the debt collector should be in writing. This will protect you if there is any misunderstanding later on.
4. Be aware of your rights. You have rights when working with debt collectors, and you must know what they are.
Are You in Need of a B2B Debt Collection Company?
Debt collection companies are an important part of the B2B world. By understanding their role in your business, you can better manage and protect your bottom line.
If you’re looking for a reliable and reputable commercial debt collection company to help you with your accounts receivables, First Federal Credit Control is here to help you.
Contact us right away to discuss how you can benefit from our services. We’ll be happy to answer any questions you may have.
First Federal Credit Control
24700 Chagrin Blvd #205
Beachwood, OH 44122