Commercial collections is a process that occurs when an account used by a business goes unpaid and the service or goods provider takes certain steps to attempt to collect on the money that is owed to them. As many business owners can attest, this is often not a simple chore. Here are 3 commercial collections questions every business owner should ask before starting the process.
Should You Keep Your Commercial Collections In-House?
When you keep your commercial collections within your business and assign it to an employee, this is known as first-party commercial collections. Third-party commercial collections occur when you hire someone outside of your business to collect on past due accounts. Commercial collections can be kept in-house for between 30 and 90 days. After that, they become harder to collect on and you may need to outsource. Additionally, you should outsource your commercial collections if you have debtors who refuse to pay or you simply don't have time to handle the collections.
Is This Account Worth Pursuing?
You may need legal guidance to determine whether you should pursue an account. Some things you'll need to consider is how much is owed, the date that you last received a payment on the account, and the status of the business. If a business is considering bankruptcy or filed bankruptcy, there is a process a business can go through to file a claim in the hopes of getting paid, but often bankruptcies result in creditors getting nothing or a very small portion of what is owed. While some money may seem better than no money, it's important to keep in mind that if you outsource the account to a collections agency or a collections attorney, you could accumulate an additional expense. You must consider whether that expense is justified based on what is owed (and whether you could collect).
Is the Account Outside of the Statute of Limitations?
Debts are subject to a time limit for collection. While that time limit may be extended or restarted, there are certain things that must happen. So, before you begin or outsource your commercial collections, you must determine if the debts are still collectable. You can also speak with experienced commercial collections attorney Ronald P. Slates for more information on this matter.