Business debt collection involves measures for the recovery and collection of debts from a commercial client, or a corporate organization. Sometimes a creditor may jump the gun while pursuing debts. It is primarily to protect the consumers against any threats or harassment that stringent business debt collection laws are in place.
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Some corporate companies have in-house debt collection teams that pursue their clients to recover debts. When in-house measures fall short to recover the outstanding payments, the recovery process is handed over to third party debt collection agencies.
Here is an outline of the most commonly followed business debt collection procedures that you need to be aware of:
1. Most creditors start off business debt collection by calling up their clients and reminding them of the outstanding dues.
2. In case of small business debt collection, creditors are generally willing to draw up a payment plan that suits their debtors. So, in case of financial difficulties, work out a payment plan that is easily manageable for you.
3. Most creditors follow up their calls by mailing written statements that contain information regarding the due amount, payable date etc. You have the authority to ask for a proof of the debt, in case you find any discrepancies in the statements.
4. Your creditor shall follow up the first debt collection letter by as series of letters demanding payment of debts. You need to be informed however, in case your creditor intends to fall on legal procedures.
5. In case of commercial debts, your creditor may route his calls to higher management of the company. Your company always has the option of disputing a debt and following legal procedures. However, such a dispute should only be initiated in case there are errors in the debts claimed by your creditor.
Once a company’s account is handed out to third party debt collection agencies, the matter is set to take up a legal course. Debt collection agencies employ financial experts known as debt collectors. These agencies are required to provide the identification of the client they are pursuing debts for and should precisely state in ever correspondence that they intend to collect debts for their clients.
These debt collection agencies pursue the case on the behalf of your creditor. Business debt collection laws do not permit these agencies to harass a client or threaten him/her into paying debts. A debtor has every right to file a law-suit against such agencies. You can not only claim money for being harassed but also recover the cost of legal proceedings.
Before taking up a legal course, debt collection agencies assign a time frame to the debtor for challenging the debts. If the debtor agrees to pay, accounts are settled and case is set as resolved. In case the debtor remains unmoved, legal actions are initiated keeping the debtor informed about the same.
Sometimes a company may sell off unpaid accounts to a third party agency. These agencies then pursue collections independently.
There are stringent laws in place to protect the all types of consumer (individual/businesses) from harassment by debt collection agencies. Profanity, abuse or threatening moves, either written or verbal, are strictly prohibited. Business debt collection rights enable a debtor to avoid being harassed. However, these laws do not shield a debtor from paying debts.
It would be best for you and your business to keep the debts from accumulating. Besides causing stress, it can lead to loss of reputation once you start defaulting on your debts. Plan your budgets and try to see where you can cut unnecessary expenses in order to avoid debts from getting bigger.