Debt Collection Process

Companies will often sell to other businesses who convert the products or services into items to resell to other businesses or direct customers. As part of this process the buyers will owe money to the sellers. While most businesses will pay their invoices in a timely manner, some will withhold payment due to complaints with the service, disagreements in the terms of the contract and due to general malfeasance. Collecting on bills from those who do not readily pay their debt is the focus of commercial debt collection.

How does debt collection work

If your company is handling debt collection internally then the process begins with a process in which the invoices are sent out and pursued by a dedicated staff member who handles the debt collection. Debt collection involves many contacts in some cases and follow ups with escalation processes surrounding getting paid on outstanding balances. If you are using an external debt collection company, in exchange for a portion of the receivables or a fee the third party will collect your debt for you and sometimes assume the collection risk associated with the receivable.

How can a business improve chances of recovering commercial debt

To have a better overall process be sure to review the design of the debt collection process as well as the people who are handling debt collection whether they be internal to your company or external parties. Consider the rate of return on your investment in your collection process and how much you have at stake. Further be sure to document the debt recovery process and have it reviewed by consultants for ways to further improve on it. Check out Commercial Debt Collection for more.