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You’ve patiently waited 30, 60, then 90 days. You've given up on the benefit of the doubt. You’ve sent letters and tried to make phone calls.

But your payment isn’t showing up anywhere.

Now what? What is the next step?

If you’ve exhausted your own resources, perhaps it’s time to outsource your B2B collection needs to a commercial debt collection agency.

Here’s what you need to know about getting involved with business to business collections.

What is B2B Collections?

Business to business, or commercial debt, collections is done by a professional collection agency that has experience collecting the larger balances of commercial debts. They use their specialized experience and resources to recover your business's debts involving the sales of services or goods to other businesses.

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Why Use a Debt Collections Agency?

What makes them more effective than going it alone, anyway?

First of all, debt collection agencies are in the business of digging deeper and recovering money. They have tools and tactics that we just don't have access to, increasing the chances of getting the money you're owed. They also have access to a team of lawyers who can assist you in any legal issues you may have, who also specialize in business to business collections. You're working with a team of experts in this specific area of business.

But using a B2B collections agency has even more benefits, like:

  • They know the laws on recovering debt. Besides that team of lawyers, collection agencies keep up-to-date on the laws and regulations that govern how debts are collected, ensuring you and your business are compliant.

  • They free up your time. Debt recovery can be stressful and a lot of work, especially if you attempt to do it alone. A professional collections agency can take over, freeing up your time and resources and allowing you to focus on other aspects of your business. <

When Should You Send a Debt to Collections?

Before you go sending a delinquent invoice over to a collections agency, you want to make sure it's the right move. Start by doing a little evaluation of your client, your relationship, and the account.

Consider these points:

  • How old is the invoice? Studies have shown that the longer an account goes delinquent, the harder it will be to collect the money you are owed. On the other hand, if it’s a newly delinquent invoice, you may be able to follow up on your own and settle the debt.

  • Have you followed up with letters? In some cases, businesses simply forget to pay an invoice. Sending a reminder letter like in these examples could just be the push they need to send in the payment.

  • Has the customer remained in contact with you? It is a red flag if your client has suddenly stopped all contact and you can no longer find them. However, if they've remained in contact, perhaps there's a good reason they haven't paid their invoice.

  • Are there other factors you haven’t thought of? Some companies have outlying reasons why they can't handle an invoice right away. For example, they could be waiting for payments to come in themselves. Touch base with your client and find out if this may be the case and if you can work something out.

How Do You Pick the Right Agency?

Once you've decided you definitely need outside help with your debt collections, it’s time to decide on the right collection agency for your business.

The following tips will help you make the right decision for your situation.

  • Get recommendations. Like with any others product or service, start with asking your network for referrals. Ask trusted friends or colleagues for recommendations or suggestions.

  • Check credentials. Do your due diligence as you would with any business partnership, even with a recommendation. Follow up with Better Business Bureau to see if the recommended agency is on their list of certified collection agencies.

  • Check the Commercial Collection Agency Association. You can also check the CCAA for a list of certified agencies, since agencies have to abide by strict criteria in order to be certified.

The agency you pick should have the following criteria:

  • They should be licensed and insured in your debtor’s state. Each state has its own laws you need to be aware of, and requires any agency to be licensed within the state.

  • They should have experience in your particular industry. While direct experience with businesses like yours shouldn’t be your main criteria, it certainly helps. It means the agency has dealt with the laws and nuances of your specific industry and type of clients.

  • They should have a plan as to how they will keep you in the loop. Yes, you want to hand off your collection duties. But you also want to be informed on what’s going on, as it is happening.

  • They should be easy to communicate with. And get back to you in a timely manner.

What Happens When You Hire a Collections Agency?

What happens when you hire a collections agency

Despite what you may have heard, debt collectors do not harass people. In fact, collectors are governed by the federal Fair Debt Collection Practices Act (FDCPA), and there are strict guidelines of what collectors can and can’t do.

For example, collectors are not allowed to contact debtors in inconvenient places, which includes most work places and work place communications like email or fax. There are also specific hours of contact, and they cannot call a debtor after 9pm local time.

They're also not allowed to divulge financial information to third parties, so your client’s information will stay private.

But you may be wondering what commercial debt collectors actually do. What happens when you work with an agency?

While not all processes are the same, here’s a general overview of what they do:

  • Collectors start by analyzing your finances to get an idea of why your debt is unresolved. They may help with your accounts receivable in order to get a better idea of the situation.

  • They utilize a team of investigators to learn more about your debtors and discover why they have become delinquent. They will also use their resources to discover any business and asset information to determine if your client does have the funds to pay you.

  • They will help you take legal action, if necessary. Your client may not have the funds, or they may refuse to pay. In these cases, a debt collection agency will use their team of qualified attorneys to help you pursue any legal action.

There’s a lot you need to know and consider before jumping in with professional debt collections. But if you’ve exhausted your own resources to collect a B2B debt, it may be time to hire an outside debt collections agency.