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

What You Need to Know about B2B Debt Collection

Debt collection is always a tedious process, but it’s an especially tedious process when one business is trying to collect from another. Business relationships are precious, and, unfortunately, easy to ruin. If you make another business mad in the process of trying to collect a debt, you could lose that vital connection.

Even if the connection is not one that is particularly important to you, you still have to be careful to operate within the bounds of the law. The Fair Debt Collection Practices Act stipulates that businesses and debt collection agencies may not harass debtors or use abusive practices, such as calling repeatedly or late at night, in the process of attempting to collect a debt.   

Whether you use a collection agency, which is advisable since it will save you time and money, or try to collect owed amounts on your own, your first step should always be to contact the business that owes you money and remind it of the debt. This initial contact should be done over the phone. Then, within five days of the phone conversation, a written notice about the debt may be sent.

From this point on, sending reminders on a regular basis is allowed and can often be helpful in keeping businesses up to date on paying off their debts. However, if you do not receive payment or any response, you also have the option of telling the debtor that you plan to take legal action, which you should do via a written notice.

As you attempt to collect a debt owed by a business, you must make sure that you are following all the rules and regulations put in place by The Fair Debt Collection Practices Act. Failure to do so could result in your business being sued or its reputation ruined.

As long as you pursue your debts in accordance with the law, however, no harm can come to you, and there’s also a good chance that you’ll even collect the money you are owed without ruining your relationship with the business debtor.