|
Debt collection refers to the timely and orderly process of pursuing and collecting money owed for goods and services bought on credit. Typically a business extends credit to his customers by invoice, while large corporations may have an in store credit card, just for their establishment.
Once credit has been extended, the Business becomes the debtor and is legitimately owed money. The business procedures for collecting on companies debts differ from business to business. Any business must clearly state in writing, what their credit terms are, including the interest rate charged and any late fees that may be incurred by late paying customers.
Usually, at the end of each month, businesses whether they are small, medium sized or large begin printing and sending out invoices or statement of accounts to their customers. As payments are received by the business to settle accounts, whether by cheque, money order or by a client paying cash in person, a debt becomes reduced or settled in full.
Businesses expect that most of their clients will pay their bills and when a client does not pay their bill, the method of debt collection changes. First a business may send a reminder invoice, or telephone the customer. If a bill is still not settled, interest becomes applied along with late charges to the existing account.
Further collection letters, each more serious than the last are then sent out to clients who do not pay. As these letters, typically known as ‘dunning' letters continue to be received by non-paying or slow paying clients, a certain percentage will decide to settle their debts either partially or in full.
When a business cannot get a client to settle their bill, or respond to requests for payment, it is usually time to consider approaching a Collections Agency or Collection Attorney for advice on how to best recover a debt.
|
