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.
Accounts Retrievable Systems- Collecting Past Due Debts
If you have a substantial amount of past due accounts and you are not using a commercial collection agency, then you are leaving money on the table. Many businesses, especially small and medium size businesses will ignore the possibility of collecting overdue accounts with help from a professional agency. There is an attempt to collect internally, using employees in the accounts receivables department, but it ends there. A business owner needs to understand that this is a specialized area of business and there are companies that have the knowledge and skill set to recover much of the debt that has been deemed uncollectable by a business.
Commercial Collection Agency
A commercial collection agency will often work on commission basis, taking a certain percentage of the money that they are able to collect from the debtor. This represents money that a business would not have been able to collect on their own. Much of this money is collected by an agency in the first few weeks that the accounts are given to them. This means a fast infusion of cash to your firm along with an increase in cash flow from a source that was unexpected.
There is very little downside to using a good collection agency regardless of the size of the company. For large corporations it can mean a substantial savings on labor by simply contracting this work out; and if the agency represents any increase in efficiency in collecting these debts, and they usually do, that will mean a greater cash flow.
There are a variety of services that are offered to a business, not the least of which is the collection of international debts. Many businesses are at a loss to know where to begin in trying to get the money owed to them. But there are many good agencies that offer this service, some of them even have a specialty in the field.
In many cases an agency can help locate a debtor that has moved without leaving forward contact information. Skip tracing is a skill that most companies outside the field of debt collection do not have. It is a combination of knowledge and skill that takes time to develop. With the case of commercial debt, there are many who walk away from a business while still owing money. These people can be found, and when presented with the debt owned, will often pay.
Commercial Collection Agency
Along with locating the debtor, a commercial collection agency can apply a variety of techniques that enhance the probability of recovering the money owed. Cash settlements for a reduced amount owed are one example. Others include final demand letters, as well as assistance in bringing legal actions against a business when necessary.
Each business has a different set of needs for debt collection, so there are going to be a different approaches as well as different degrees of effort that are needed. Prices will vary from agency to agency, therefore, it is important to gather the necessary information to get a quote on the work that will be needed to help you start getting the money owed to your company.
Debt Collection Services - Accounts Retrievable Systems
Strategy for Success: Hiring Commercial Collection Agencies
Its more cost effective to nurture existing customers than to acquire new ones, so many companies are responding to market pressure by reducing prices, extending terms, and offering promotions. At the same time, they are becoming more aggressive in helping their customers keep to payment schedules.
As it is with parenting, so it goes with sales: simultaneously trying to be good cop and bad cop can be just as confusing for customers as it is for children, which is why companies are calling in commercial collection agencies. The benefits are many:
• Company representatives avoid becoming embroiled in adversarial relations with customers that can deteriorate to the point of no return, literally
• Company representatives can use their time to nurture existing business and develop new clients instead of collecting debt
• Collection services are usually paid on performance, so they are not a drain on business cash flow
• The sooner collection is attempted, the more likely it is to yield results, so collection agencies should not be viewed as a last resort but rather as a normal business process
Immediate Relief
Businesses that need funds immediately may be able to sell their accounts receivables outright to debt purchasing agencies. In this case, businesses receive only pennies on the dollars owned to them, but they get their money right away and get to take the liability off their books. Debt purchasing companies make their money when they are able to collect more than what they paid for the accounts.
The decision to hire collection agencies or to sell debt is more about the need for cash than about the relationship with delinquent customers. Neither choice necessarily precludes sellers and buyers from doing business in the future.
The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third-party collection agencies, protects consumers from unfair and abusive collection practices. This piece of legislation includes an intricate collection of dos and donts that small business must abide by in order to comply with federal guidelines. Running a business is complex enough, but understanding these rules can be more than a company can handle. Thats why collection agency services have become an integral part of operations. Small Business Brief writer Joel Walsh highlights a few of the critical aspects of the FDCPA worth mentioning:
• Forbidden Practices. Such as collecting more than the actual debt, pursuing debts in dispute, contacting the debtor during disputes or depositing post-dated checks
• Forbidden Communications. Such as posing as a government agency, sending non-legal forms, threatening arrest or posing to sue without the authority to do so
• Forbidden Disclosures. Such as giving incorrect credit-related information, sharing debt information with non-involved parties or contacting other parties more than once
Collection Agency Partnership: Empowering the Process
There are several key practices any small business can do that will help the business collection agency do their job better–activities that can grease the wheels of the collections process so that valuable resources arent wasted. Business Know-how writer Barbara Brabec reveals a few of them:
• Setting the Ground Rules. Explicitly outline the payment process, including what is expected of clients and customers
• Establishing a Contract. A formal statement showing payment expectations and consequences for non-payment
• Providing Positive Communication. This may include emails, phone calls, and hardcopy letters as reminders of pending payments
The bottom line is that the process of collections is precisely that–a process that proactively handles any situations that could hamper timely payment. After all, the reputation of the business and the customer is at stake.
