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What is a Commercial Debt Recovery Agency?

commercial debt recovery

A Commercial Debt Recovery Agency should be a Professional solution for the collection of overdue B2B invoices or such like. It can also be a resource for the recovery of delinquent accounts arising from services or goods provided.

Commercial Debt Recovery services are normally carried out by a third party of behalf of Businesses. They will often not be involved in the original contract but there will likely be a provision for such action. A Commercial Debt is characterised by the nature of the company it is owed to. Business Debt Recovery services are viewed by many Businesses in the UK as a financially viable solution to collect overdue debts.

Commercial Debt Collection is also referred to a Business Deb Collection or B2B Debt Collection. There are hundreds of companies in the UK offering such services. Some good, some bad and some downright criminal. Much thought should go into recruiting the best Debt Collection Agency to work with. Consideration such a reputation, professionalism and success are major factors.

The FCA (Financial Conduct Authority) is the authority that governs many parts of the Debt Collection industry. They legislate and monitor the activities of Consumer Debt Collection Agencies. The Credit Services Association is the industry trade association that also helps to regulate. Any ‘agency’ that is not affiliated with either should normally be avoided.

When to use Commercial Debt Collectors

Using Commercial Debt Collectors is effective when used in a timely manner. Many companies use them as part of standard credit control practices. It is normally when reminders for Unpaid Invoices have been ignored. Typically it will be within 28 days or the expiry of the invoice terms.

A Business Late Payment is considered such once the terms of the account or invoice have expired. The Creditor is entitled to start to charge interest under the Late Payment of Commercial Debts Act. Many do not for fear of alienating their customers. Standard invoice terms tend to be 30-60 days depending on the industry. It is not uncommon for 90 terms in some sectors such as construction.

A Business that owes money should expect third party intervention when they have not paid their dues. Unpaid Invoices and late payment of invoices is the nemesis for UK Businesses.

What do Commercial Debt Recovery Agencies do?

B2B Debt Collection Agencies can vary in their strategies. Some will do very little other than send an email or a letter. This is known as playing the numbers game. For the purpose of this article, we will focus on the comprehensive actions taken by a comprehensive B2B Debt Recovery service such as ours.

A full 360 degree Debt Recovery service will apply a diligent approach. A non exhaustive list of Debt Collecting activities will include a whole manner of proactive actions. From instruction, the strategies used will determine the outcome.

Pre Legal Debt Collection actions will normally include expected tasks such as sending letters and making phone calls. The use of Emails and SMS Text is also a productive tool in the quest to recover Business Debt. The objective is to engage the Debtor and procure payment. Visits from Field representatives may be necessary to do this. For the more evasive debtors, it could be that Enforcement Action is needed.

It is important to understand that not all Debts are the same. Every situation is completely different. Each scenario will have its own obstacles and challenges to overcome. This is were a results and principle driven service really shows its teeth.

The Cost of using B2B Debt Collectors

As with any industry, the cost to use Commercial Debt Collection services can vary. Many companies have drip pricing policies or fee earning. This is where a charge is made per action taken. Some claim to be ‘no win no fee’ debt recovery yet the truth is they are not. No Business can operate without cash flow and what actually will be done to collect what is due. Very little is the obvious answer.

A transparent Debt Collection service will be very clear about what it will cost your Business from the start. Commission rates can vary greatly on average, from 20% up to 50%. This can fluctuate depending on the value and age of the debt. There are also other factors to consider therein such as location of the debtor.

Commission rates for International Debt Collection tend to be much higher. This is for obvious reasons as the costs associated with collecting foreign debts is naturally more.

At Federal Management, the commission rates can start from around 6% for Larger Debts. There are no hidden fees and a completely transparent service. A Free review of all cases is provided and a complete service given.

Whatever your preferred option, you need to remember that any Commercial Debt Recovery Agency will be an Ambassador for your Business. You will penultimately be responsible for their actions so any ‘rogue’ business debt collectors is not an option.

If you are seeking Professional Low Cost B2B Debt Collection service, contact our friendly team today for Free advice.