Wednesday, January 27, 2016

Read This Before You Start Collecting Business Debts

A lot of small business owners are aware that there is a such thing as the Fair Debt Collection Practices Act, but sadly, most people don’t really know all the rules and laws that relate to this act or what those rules or laws mean for their business.

In fact, many businesses wrongfully believe that the Act, which was first instituted in 1977, is there to protect them. In truth, though, it’s actually designed to protect the debtor. What’s more is that the rules only apply for person-to-business debts not for business-to-business debts.   

Where You Live Matters

Business to business debts are, as mentioned, not regulated under federal law. Instead, the rules surrounding these debts and how they must be handled fall under state law. So, the rules you’ll need to know and abide by will vary based on where you live!

In some states, for example, any collections must be conducted under licensed and/or bonded commercial collection firms. Other states are less strict about how collections can be handled.

The best way to determine what your state’s laws are is to contact your local business bureau. That way, you can ensure that you’re operating within the bounds of the law and that you’re hiring collection agencies that are as well.

Help and Advice

If you are having trouble collecting on business-to-business debts, you may wish to contact the Commercial Law League of America, which operates a Commercial Collection Agency Association. While this organization does not have legal jurisdiction, it can be a good source of advice, can provide you with a list of quality collection agencies, and can handle complaints and problems you’ve had with collection agencies.

Use Caution...Always

When it comes to collecting on business to business debts, make sure you always use caution. Be careful about which collection agencies you hire. Make sure they are courteous with your delinquent customers so as not to break the law, land you in legal trouble, or damage your reputation!

Also bear in mind that, in many cases, you can avoid the hassle and risks of collections by having tight control over your receivables. If that’s too much for you to handle, that’s okay; there ARE good collection agencies out there- you just have to take care that you choose one of the “good guys.” #B2BDebtCollection

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