Debt
Collection and Accounts Receivable Recovery:
5 Simple Steps
1. The
first step in the collection process is to send the debtor a past due
invoice stating their account is 30 days past due and payment must be
received within 14 days or their account maybe subject to further
collection efforts. It is important to document each contact you make with
the debtor, this will make your job easier down the line for more
aggressive collection approaches.
2. After
14 days, contact the debtor by phone and kindly remind them of their
outstanding debt, because in some cases they may have simply forgot about
the bill and sometimes will pay in full or make partial payment. After
making your phone call to the debtor, allow an additional 14 days for
payment to be received before sending a letter of demand for payment.
3. A
demand for payment maybe needed after the debt is 60 days past due,
include all documentation supporting the debt. Mail a letter, along with a
copy of the past due invoice, and any other supporting documentation to
the debtor. State in the letter that payment must be received within 10
days or the account will be turned over to a collection agency.
4.
Collection agency services may be needed to collect debts beyond 60 days
past due. It is important to start the collection process early. Do not
wait until the account is 1-2 years past due, because as time passes the
debt becomes increasingly difficult to collect and collection agencies
typically charge higher fees for older accounts. The collection agency
will then mail the client a validation, which is a letter that states the
balance due and who the original creditor the debt is owed. The debtor
then has 30 days to dispute the debt, if after 30 days no dispute is
received, the debt is assumed valid and the collection process continues.
If you decide to send an account to a collection agency, it is very
important that you cease all communications with the debtor. Be sure to
give the collection agency all the documentation available about the
debtor as it will make the collection process easier with the more
information you can provide.
5. The
final step in the collection process is utilized when all other collection
attempts have failed and involves taking legal action against the debtor
to force payment of the debt. Typically, collection agencies use lawsuits
as a last resort to collect past due balances. Most of the time collection
agencies will work together with the debtor to arrange payment plans,
however if the debtor does not contact the agency or does not maintain
their payment plan, the end result is usually taking them to court and
obtaining a judgment. A judgment allows the agency to utilize many
remedies available to them to finally collect the debt and pay their
clients.
NOTE:
Information provided in this article shall be used for informational
purposes only and not to be construed as legal advice, contact and
attorney for all legal concerns.
For more
information, please visit our website at
http://www.alliedadjustment.com
.
Jason
Ziarko may be contacted at
http://www.starcomputerparts.com
jbziarko@starcomputerparts.com
