Business-to-business debt recovery is the collection of past due accounts receivable owed by one business to another. A third party firm that specializes in collecting delinquent debt from business clients is typically hired to manage the process. Also known as commercial debt collection, the distinguishing feature of this type of recovery is that the debt is between two businesses, rather than a business and an individual customer.
Collection firms that handle business-to-business debt recovery do so on a contingent fee basis. The transaction is usually structured so that the firm takes 15-25% of whatever amount the firm manages to recover. This percentage may seem exorbitant, but the time and effort it takes to recover delinquent debt is substantial. Many businesses prefer to pay an outside agent to handle the process rather than spend valuable time away from core business activities.
Tactics employed by commercial debt collectors vary by jurisdiction. Debt collection is often regulated to protect individual consumers, but some of the same laws apply equally to business debtors. Business-to-business debt recovery will typically include initial communications and follow-ups, offers to settle for less than the amount owed, research to locate assets that can be seized, obtaining a judgment in court, credit bureau reporting, and locating debtors that may have skipped the area to avoid the debt.
Commercial debt collection may seem very similar to consumer debt collection, but there are some important differences. Approach is a factor in business-to-business debt recovery. Depending upon how a business is legally organized, the owners are likely to be shielded from individual responsibility for business debts. This means that debt collection is only effective if the owners have a business that they don’t want to abandon. A business with outstanding debt can simply close its doors or file for bankruptcy, and the owner can go and set up another business doing the same thing and free of old debt.
It can be particularly difficult to recover debts from businesses with nothing to lose, but it can be easier to collect debts from businesses with valuable reputations, roots in the community where it operates, and multiple business relationships. Successful business-to-business debt recovery is predicated on the creditworthiness of the debtor and the debtor’s desire to stay in business. Many businesses rely on credit terms from vendors to manage inventory and cash flow. The commercial debt collector is often not legally prevented from contacting the business’ other vendors, unlike in a business-to-consumer collection, and making it known that the business is not paying its bills. If the business has too many creditors, they can team up and force the business into involuntary reorganization or bankruptcy.
Bad debt recovery is an attempt to secure a partial or full payment of a debt that has been written off due to non-payment. Businesses sometimes conduct this type of activity after taking steps to designate the amount of the debt as uncollectable within the company’s accounting records. For this reason, any amount that is collected as a result of bad debt recovery efforts is often treated as new income.
Just about every business has experienced some amount of bad debt at one time or another. Banks sometimes write off negative balances on overdrawn accounts as a bad debt, if efforts to motivate the customer to make a deposit and restore the balance to zero prove fruitless. Credit card providers sometimes dismiss balances on accounts as being uncollectable, rather than continuing to carry the balances in their receivables. It is not unusual for a company to include a budget item that is known as an allowance for bad debt, using the resources of that account to cover uncollectable debts. While this helps to keep the accounting records accurate, it does not prevent the recording of later transactions in the event that full or partial bad debt recovery takes place.
What many consumers do not realize is that once a debt has been written off as being bad or uncollectable, the business may still take steps to recover at least part of the loss. One approach is to assign the bad debt to a collection agency, allowing that entity to move forward with attempts to contact the debtor and arrange a repayment schedule. This solution often calls for the collection agency to keep a percentage of the collected amount as compensation for its efforts. Once the percentage is deducted, the remainder of the collected amount is forwarded to the original creditor, where it is documented as a recovery from a bad debt line item.
A second approach to bad debt recovery involves selling the uncollected debt to another business. With this solution, the original creditor sells the debt for a small percentage of the total outstanding amount. The buyer assumes the risk of being able to collect the entire amount, while the original creditor can record a partial recovery of the bad debt in its accounting records, effectively closing the matter entirely.
Since companies tend to write off bad debt and remove the balance of the debt from their receivables, the process of bad debt recovery usually calls for any portion of the recovered debt to be treated as income. Most companies do have specific procedures for documenting the source of the income, so that it is possible to differentiate the collected amount from other sources of income, such as earnings from sales or dividends from investments. In some instances, the process involves entering a set of postings that debit the receivables and tying the transaction back to the original write-off. This approach effectively offsets the write-off at least in part, while still documenting the history of the transaction from the date of the write-off all the way to the receipt of the collected revenue associated with the bad debt.
Since 1986, ARS Collection Agency has delivered professional, highly effective results for clients on a worldwide basis. ARS is recognized as a leader in Judgment Collections, Commercial Collections, Consumer Recovery, and is a specialist in collection of Child Support and Spousal Maintenance. Our partnership approach, rapid collection and ability to preserve relationships form the cornerstone of our commitment to excellence.
With three decades of experience both domestically and internationally, ARS Collection Agency serves a broad spectrum of industries.
ARS Collection Agency clients benefit from an array of collection solutions designed to increase cash flow, reduce expenses, improve operational efficiency and maintain positive customer relations. We are proud of our ability to deliver professional, effective and timely results worldwide.
ARS Collection Agency strives to remain a leader in the industry. ARS Collection Agency is comprised of a strong, cohesive and committed team. Our consistent track record for successful outcomes stems from a forward-thinking corporate mix where personal and professional aspirations thrive and progressive ideas flourish. Our team is kept current on all laws and statutes, FDCPA and FCRA compliance through ongoing education, and by attending seminars and meetings throughout our affiliations with the Commercial Law League of America (CLLA), the American Collectors Association (ACA), and DBA International (DBA).
Our company’s commitment is to constantly reinvest in our employees, new technology, recovery resources, professional staff, legal solutions, and innovative systems and procedures.
ARS’s legal solution is centered around our network of experienced collection attorneys. Our Forwarding Department coordinates litigation services for all 50 states and beyond. By having successfully litigated tens of thousands of cases for creditors, our legal network has the litigation experience to help our clients achieve maximum results and minimize any potential exposures.
ARS utilizes a wide range of technological tools and resources to help each client achieve the best possible results. Our staff has access to the latest software programs with enhanced security and a state-of-the-art secured network with a full disaster recovery program.
Our focus is on the specific needs of each client’s portfolio, whether it is for one claim or for thousands and is built on systems and personnel already developed, tested, and proven on a day to day basis. ARS will never close an account until every collection option has been exhausted.
Our services are based on a contingency fee arrangement; therefore if our attempts to collect are not successful, you will not be charged!
Compliance
ARS Collection Agency is fully compliant and adheres to all Federal and State Collection practices regulations. We follow high standards for compliance, confidentiality, and privacy requirements.
Accounts Retrievable Systems - Debt Collection Agency
Third party debt collectors are also referred to as collection agencies, and are hired by credit companies and other businesses to collect payment on debts that have become significantly past due. Sometimes the borrower will still owe money to the original creditor, while other times the collection agency will actually purchase the account, and the borrower will owe money directly to them. Third party debt collectors will employ a number of different methods in order to attempt to collect.
Once a credit account becomes past due, the account will be sold to a collection agency or the agency will simply be retained by the creditor to collect on the account. The third party debt collectors will then begin attempts to try to collect the funds. They will usually send letters in the mail and place numerous phone calls in an attempt to get the borrower to pay. There are laws governing the amount and types of phone calls that third party debt collectors can make.
For instance, it is unlawful for third party debt collectors to call before 8 a.m. or after 9 p.m., or to behave abusively or in a threatening or harassing manner on the phone. They may not contact friends, family members, or coworkers except to obtain a phone number or place of residence for the debtor. They may not share information about the debt owed, or report it to any other credit agency. These are just a few of the regulations that third party debt collectors must follow, though in many cases they do not follow them, and it is up to the debtor to report the company to authorities.
These third party debt collectors exist because credit companies often do not have the time or resources to deal with numerous delinquent accounts. It often works out in the credit companies’ favor to have a third party debt collector handle the collections process, because they are more likely to get results and collect the funds that are owed, saving time and money for the credit company. This is often true even if third party debt collectors are authorized to settle the account for a smaller percentage of the money that is owed.
Accounts Retrievable Systems - We Collect Judgements
A debt collection agent is trained to convince debtors to repay the money they owe. This typically involves contacting debtors by phone in order to collect money, but debt collection agents often use the mail to contact debtors as well. They are typically trained to secure payment in full, but may also have authorization to settle or make payment arrangements. A debt collection agent may work for a single company and collect debts on its behalf. In some cases, however, he may work for a debt collection agency and collect money for a variety of companies.
In most cases, a debt collection agent contacts people who have fallen significantly behind on paying their bills. For example, a person with this job is often called on to contact a person who is at least a couple of weeks late with a bill. The amount of time a company will wait before beginning collection efforts may vary from business to business, however.
A debt collection agent usually calls a debtor, informs him of the amount of money he owes, and then requests payment in full. If a debtor provides a reason for his payment troubles, a debt collection agent usually tries to get him to pay despite his reasons. In many cases, a person with this job is trained to use persuasion to convince a debtor to pay. He may tell the debtor that refusing to pay will damage his credit report or lead to legal action. He may also appeal to the debtor’s sense of responsibility for paying his debts or even suggest ways to raise money.
Often, a debt collection agent is authorized to negotiate an agreement in the event that a debtor is unable to pay in full. For example, he may be authorized to accept a reasonable agreement for monthly payments. He may also have authorization to make a settlement offer. For instance, he may agree to take 70 percent of the total bill if the debtor pays right away. In such a case, the rest of the debt would typically be erased.
Usually, a debt collection agent attempts to obtain a payment right away. He may ask the debtor to make a payment by phone, using a check or credit card, for example. Often, debt collectors feel it best to get at least some money up front. This may be due to the fact that some debtors will only make an agreement in the hopes of getting the debt collector to hang up the phone.
If debt collection efforts are unsuccessful, a debt collection agent may try again on a later date. This depends on the policies of the company that hired him. Eventually, however, he may turn the account over to an attorney who may obtain a court judgment against the debtor.
Third party collection is a form of debt collection which is performed by a third party, a person or entity who was not part of the initial transaction or contract. Creditors may turn to third parties when their own debt collection efforts are not effective. The activities of third party debt collectors are limited by law in many regions of the world and people who are in debt would be well advised to get informed about the specific laws in their regions, as debt collectors sometimes attempt to skirt the law when they make efforts to collect on a debt.
Many large companies have their own collections departments. Initially, these departments will attempt to collect the debt internally for the company. If the debtor does not respond, the company can hire a collections agency which specializes in third party collection. Smaller companies may turn immediately to an agency because they cannot afford to maintain a collections department.
Classically, third party collection starts with a series of letters, for which the creditor pays a flat fee. The letters encourage the debtor to pay the debt in full to the creditor. If there is no response, the creditor assigns the account to the agency and the agency can take more aggressive means to collect on the debt. If the debt is collected, the agency retains a commission and sends the rest to the creditor. Creditors want to avoid third party collection because it means that they cannot collect the debt in full, thanks to the commission which must be paid.
Debt collection attempts can include letters and phone calls to the debtor. Depending on the jurisdiction, the agency may be able to file suit on behalf of the creditor and to take other steps. If someone has cosigned on the debt or assumed responsibility for a debtors outstanding debts, the third party collection can include attempts to collect debt from this person as well as the original debtor. A third party collections agency usually cannot, however, confiscate assets belonging to the debtor unless a suit has been filed and judged in favor of the collections agency.
It is important to be aware that when a third party debt collection occurs, the creditor still owns the original debt. Creditors can also opt to sell their debts to companies which buy debt and collect on it. When the debt is purchased, the new buyer becomes the creditor. Companies which buy debt can be quite aggressive and people who owe money would be well advised to try and work out a payment plan or settlement before the original creditor sells the debt.
Accounts Retrievable Systems - Collection Agency Services
If you ask the average person, “What does a debt collection agency do?” they would most likely respond, “They, uh…collect debts.” But ask them to elaborate a little and you might get something that starts like, “Well, first they buy a bunch of debt for pennies on the dollar, then…” This is where they start getting it wrong.
It’s not their fault. A common refrain in recent press coverage of collection agencies is that the debt collectors making the calls are doing so on their own behalf. The phrase, “pennies on the dollar” started to creep into coverage of the debt collection industry about five years ago, around the time that the press discovered there was a whole industry of debt buyers.
For the record, the vast majority of collection agencies in the U.S. work on a contingency, third-party basis. This means that they are paid when they collect on accounts owned by another company, most commonly a bank. There are also many other business types that are served by debt collectors: doctors, hospitals, governments of all sizes, auto lenders, utilities, any small business you can imagine, and yes, debt buyers.
“I’m not paying you. I don’t understand your business model.”
Most people think collection agencies are financial firms, but at their core, they are really B2B service businesses. A work order (in this example, a defaulted consumer credit card account) is placed and once the work is completed (the consumer pays the debt), they are paid. Accounting in collection agencies is pretty straightforward.
Debt buyers, on the other hand, have a business model that aligns with their name: they buy debt. Debt purchasers are financial firms, with accounting practices much more similar to large consumer banks than collection agencies.
Collection agencies and debt buyers are undeniably linked, regardless of their differences. In fact, many debt buyers forward their accounts to collection agencies to work on a contingency basis. Also, they do basically the same thing for credit originators (return value of non-performing credit accounts). They just go about it in a different way.
Collection agencies and debt buyers often compete against one another for shares of banks’ charged-off debt portfolios. Collection agencies want the work farmed out to them while debt buyers want the banks to sell them the debt.
The laws governing the two are also different. The Fair Debt Collection Practices Act (FDCPA) governs the behavior of collection agencies, but generally does not apply to debt buyers (or banks, for that matter). This is being slowly changed, as many state legislatures are amending their versions of the law to include debt buyers in the covered businesses. But the federal government (read: FTC) still has separate rules for the two business types.
Collection agencies and debt buyers also have different associations that support them, ACA International and DBA International, respectively, although there is plenty of crossover between the associations. In fact, ACA has a group within its ranks specifically for debt buyers.
But there might be less crossover soon. Just last month, a state unit of ACA International proposed dissolving the debt buyers’ group within the association and recognizing debt purchasers as creditors, for membership purposes. The folks that proposed this move are seeking to codify within their group what many of them already know: the two businesses are vastly different enterprises.
The next time you see a story that asserts a collection agency “paid pennies on the dollar” for the debt, please look into the firm and see if their primary business line is debt collection or debt purchasing. The companies really don’t try to hide that fact; it’s pretty simple to tell who is who.
Accounts Retrievable Systems Debt Collection Agency
If you are in a business that deals with lending money to people then you are automatically involved in debt collection. Many people believe that collection of debt is an easy process but the reality is that it is often a tedious and tiring job. Bad debt is a growing problem that is affecting businesses of all sizes and every company has its own share of non paying customers. If you are finding it very difficult to deal with such customers, here are some tips that would speed up your debt collection.
Collection Of Debt
Know about the debtor : The first important thing that you need to do is learn about the debtor. Have a clear knowledge about his account details and credit record. This would help you a lot when you call and talk to that person.
Maintain Professional attitude : Maintaining professional attitude when dealing with debtors is very important. Never raise your voice or yell at the debtor even if you are frustrated with his attitude. Debt collection laws have become very strict these days and you may face legal proceedings for illegal harassment. Always maintain a calm composure.
Writing is Better than Calling : Majority of the customers are scared of receiving collection letters and more likely pay off their debts after receiving a series of them. Debtors can easily avoid your calls but not your letters. Also calling the debtor for more number of times might land you in legal troubles for illegal harassment.
Stay Focused : Debtors always try to divert your attention by giving innumerable excuses. Always stay focused and control the conversation. Put an end to their excuses by offering a solution. If they say that they need to withdraw the money from the bank offer to take them to the bank. Collection of debt is your primary target and do not let the conversation deviate from it. keep the call brief and to the point.
Be Cooperative : Understand the customer’s problems and his financial situations. He also wants to pay off this debt and avoid these uncomfortable conversations with you. This can only be achieved with your co operation. Formulate a reasonable payment plan that suits the debtor. This would help the debtor to pay off his debt and also helps you to maintain a good relation with the customer.
Report Debtor Name : Some of the debtors have really bad attitude and are very stubborn. Dealing with such people is very difficult. In such situations threaten the debtor that you would report his name to the credit rating agencies. This would scare even the toughest of debtors as reporting to credit agencies affects tampers their chances of getting credit for as long as 7 years. If they still do not budge to your threatens then go ahead and report his name to the credit bureau.
Hire a Collection Agency : The best solution for all your debt collection problems is hiring a collection agency to do the job. They are professional experts in debt collection strategies and are well versed with the legal protocol, so you can leave the task to them and relax. Handling difficult debtors requires a lot of patience and skill and collection agencies exactly knows how to deal with them. There are many collection agencies that collects your bad debts for reasonable costs. It is always a good idea to leave the job to the pros.
File Lawsuit : This should be the last step from your side. If the debtor is very stubborn and if your collection agency also fails to collect the debt, then it is for the court to decide the dispute. Warn your customer and then file the lawsuit. But it is always advisable not to bring things till this level.
Many companies are concerned about money owed to them by individuals or other organizations so it is very important for them to employ the professional help from collection agencies. Debt collection agencies are the ones who are well equipped and more knowledgeable when it comes to figuring out which methods to use to effectively collect debt from the debtors.
Businesses and companies should just concentrate on their operations and other ways to boost their revenue and leave the collections to the debt collection agencies instead to allow for 100% success rate on collections. It is important for a business to realize that bad debts can affect the accounting books in a great way and can decrease the likelihood that a business will succeed, especially if the debts are so enormous that it does not balance out to the gains of the company. A debt collection firm can step in and help sort everything out and make sure that all the backlogs and losses are mitigated.
Debt Collection Agencies
Debt collection agencies have the right amount of manpower that has been trained especially for debt recovery. This is a type of skill that is so highly specialized because of the complexity of gathering money that was owed. Debt collection agencies have invested their money and time in the art of persuasion and conversation to give opportunities for the debtors to negotiate and eventually settle their debts. Debt collectors have studied consumer behavior, most specifically those of the debtors and they have mastered all the moves that debtors do to evade paying. It is the debt collection agency’s job to go around these obstacles to make sure that debts are paid.
One of the best things that a debt collection agency can do is send a debt collection agency representative. By doing so, they are able to establish a more serious tone of debt collection more than how letters or phone calls can. A lot of debtors feel that when they encounter a debt collector face to face, the debt collection is much more serious and more urgent than ever before. A collection agency understands perfectly that phone calls and letters, and other impersonal methods of collection can be ignored by other people and not be taken seriously.
Debt Collection Agencies
Debt collection agencies also have the right connections with private investigators and other authorities who may be of big help in trying to recover debt. Private investigators may be employed in order to look into the personal information of the debtors that may help in legal action or further negotiations that may push for them to pay their debts. Asset investigation representatives are also ready to take on the job of researching about the properties, bank accounts and other pertinent information that will show the capability of a debtor to pay the overdue amount. These are the methods that debt collection agencies are capable of in order to help out companies and businesses recover money that is rightfully theirs to start with. By doing these, debts can be settled effectively.
Accounts Retrievable Systems - Collection Agency Services
Businesses know the significance of keeping on the top of their accounts receivable. Of course, they also know that it can be quite time consuming and often is not an easy task. For this reason hiring the best collection agency services can not only save you time and effort, but can also recover you the money that would otherwise not be possible. After all, you need to focus more on your core business rather than going after your debtors. By using the services of a debt collection agency, you can add more revenues to the company from the accounts that may otherwise have to be written off.
Collection Agency Services
When the file is given to the collection agency services for debt recovery, they usually require that you cease all communication with the debtor. This measure is taken to avoid any perception from the debtor that they can easily go back and forth between your business and debt collection service in order to avoid paying their debt.
If you are interested in hiring one of these collection agency services, then you should check each one of them thoroughly. Whether they specialize in bad check collection, retail or commercial collections? Do they have experience in collecting debt in your particular business?. These things do make a difference, so it is better if you can clarify beforehand. You should also ensure that the collectors working in the company are trained in dealing with the customers. They will represent you and often tempers run high in collections; just one bad conversation can have serious repercussions for your business reputation.
You should also seek references, as good collection agency services will happily provide you with. As collections services employ different strategies to collect outstanding debt, you must make sure that you are aware and approve of all such methods. Each state in the USA has its own collection laws, so be sure that collection agency you hire is up to date on all current collection laws and regulations.
Collection Agency Services
Sometimes, when your accounts are behind on payments, you are going to have few accounts that may have “skipped”. This means they may have moved to some other place without leaving any forwarding information. Such skips can cost considerable money and time to businesses, so most collection agency services offer some kind of skip tracing service. Cost involved in such services may vary and normally depends upon the time and resources spent in tracing the debtor.
One of the biggest tools that debt collection agencies use is the series of demand letters that they send out to the debtors. You can request the copy of those letters as this will help you in comparing different collection agencies on how they measure up. As telephone is their second most important way to communicate with your debtors, most of the collection agency services use different scripts while speaking with the debtors. By asking for such scripts from every collection agency, you can easily compare them against each other so that you can make an informed decision. Most of the debt collection agencies have their own websites where they list the services provided by them and various other details you might be interested in. So a little bit of research by going online will also help you in hiring the best collection agency.
