Debt recovery is a very important and possibly crippling branch of credit management, that a company should take note of, should the company wish to survive long and prosper in today’s market. Every single company, big or small, needs money to start and money to stay afloat in the field. Without money, the business lacks the resources to work as efficiently as it should, as the money would be required to pay for the resources. That notwithstanding, many companies have issues with their financials as a result of the debt they suffer in the process of work.
Debt comes about when the company has a higher financial demand – from the production side – than the money within its system – both revenue and investments. Many companies suffer from this because their clients fail to pay or pay on time for the services they receive and as a result there is a gap in the flow of money within the company. Thus, many a time, a third party such as a loan is added to the equation, to allow the company to maintain their proceeds without the payments of the clients. This only serves to push debt further down the throat of the company. Without services in debt collection, the company may plummet further.
If a company is spending money and not receiving payments for the services they offer from the clients who enjoy them, then the company is soon bound to hit a bump that may be as much a challenge as tarmacking and all processes may be come to a standstill as a result of this. The death of a company. Or as a last resort, the company begins to invest from its labourers personal savings to save itself, which hurts the workers within the company
Debt collection is a particularly tricky business especially when your actions may be viewed as either debt collection or even harassment depending on the context. For example, did you know that the manner in which you contact an individual who is in your debt actually matters according to the law? An example of such an act that may not be well – known is the fact that the time you choose to call a debtor may be put under scrutiny. For instance, calling someone before typical business hours (8am) may be deemed as harassment by the debtor. Similarly, calling someone well into the night may be deemed as harassment as well.
The Fair Debt Collection Practices Act (FDCPA) is a federal law that actually limits the actions of debt collectors in collection of certain types of debt. It typically prohibits debt collection firms from being unduly aggressive, abusive or deceptive when collecting debts from any individual in debt. Typically it covers mortgages, medical debts, credit cards and other debts that are undertaken for the purposes of family, personal or household needs. However, this does not cover business debts.
However, businesses may be protected by regulation or well – established associations within the country. In some countries collection firms are required by law to be in possession of a licence in order to conduct such business. Others may have acts that govern business debt collection. Small business owners should be wary as there may be very few debt collection agencies licensed within their countries. You would do well to contact your local business bureau or log in to your local government online portal (if any) for insight on the relevant laws within your state. There are also well – established associations that seek to look after the rights of creditors and their debtors in relation to the best practices and needs in business debt collection.
As we have seen, a firm grasp of the laws applied to debt collection practices as well as debt collection agencies may have a considerable impact when it comes to collecting debt. It may pay dividends for your firm/business to have at least one individual with a firm legal b ackground so as to ensure debt collection within the frame of the law as well as protect you from predatory debt collection agencies.