Business debt is a debt that is used for commercial purposes like business expansion, asset acquisition and other developments. Companies while trying to channelize these, sometimes, incur huge unexpected losses. This may result in loss of fame for debtors and loss of money for creditors.
Rather than declaring bankrupt, it is better to clear some part of the amount to benefit both the parties. Commercial debt collection agencies help debtors in settling the transaction in an efficient way by talking to creditors in adjusting the due amount to a reasonable level.
Role of Commercial debt collection agencies
The Business Debt Collection agencies are professionals in collecting past dues and in following up with the debtors. If the original creditor, after giving repeated notices to the debtors, has the right to outsource it to collection agencies to collect dues on their behalf. Once this comes in to agency’s hands there are chances that things move rapidly. Since agents gain money only if the debtors pay them, they are very strong in their operations. They give regular follow ups to debtors through mails and telephone calls. If there is no proper response from the debtors with in specified time, they can file a law suit.
To undertake these kind of activities the commercial collection agencies should abide by certain norms according to Collection laws of various countries. Some of them are:
- There are collection practices acts in many countries by various names which prohibit agents from harassing the debtors. All activities carried for recovery should be fairly under the norms of Collection practices act.
- In many countries like UK and USA there are Commercial Collection Agency Associations to control the activities of the agents. Moreover, in order to become a member of these associations the companies should uphold strong ethics and high standard morals.
- Also they should obtain a license in order to be professionally qualified to discharge their functions. They should pay the license fee and then they are issued a bond for a specific time which has to be renewed every year or every alternative year depending on the laws of the state.
- They are not supposed to give calls to debtors at all times and need to abide strictly to timings. They are required to handle the issue for legal proceedings only after a speculated period of time.
- Once all legal verifications like amount due, when to submit the law suit are finalised they have to give a prior intimation to the debtors and creditors regarding the next plan of action. Nevertheless it would be a surprise to both the parties.
- Their fees should be fairly decided prior hand according to the amount debtors can afford to pay.
By abiding to the above norms, agents can avoid unlawful notices by courts and act as strong mediator for both the parties.