When it comes to trying to recover delinquent accounts from your debtors, the various debt collection laws can, at times, feel like a hindrance. Clearly, your primary goal is persuading as many late-paying customers as possible to pay their debts, thereby keeping your business’ cash flow strong.

Contacting Your Customers – Do you know what measures you’re allowed to take when it comes to trying to contact your customers? The Fair Debt Collection Practices Act protects debtors from certain methods of collecting debt.

For instance, there are limitations on the hours during the day in which you can contact debtors. There are also limitations placed on where you’re legally permitted to contact debtors as it concerns their past due debts. Be sure to know and operate within these prescribed legal guidelines.

Should you reach a third party in your attempts to reach the original debtor, there are also restrictions on what you share with that third party. You’re only allowed to ask the best way to reach the actual debtor.

Ownership Of Debt Disputes – There may be instances when a debtor will deny owning the debt, or that they owe your business any money. When this occurs, you are required to send written proof of this outstanding debt

Truthful and Accurate Information – The law requires that you provide debtors with truthful and accurate information. For example, it is a violation to intimate or threaten arresting debtors for delinquent accounts. You can’t represent that you have legal representation, if in fact, you do not. You also cannot insinuate that debtors will be chased after by any governmental authority.

You’re permitted to only give accurate information about the debt, and all your collection tactics must abide by the debt collection agency laws at all times. If you found in violation, your debtors have the right to sue you, and could potentially collect as much as 1 percent of the collector’s net worth.

It is very important that your business clearly understand the debt collection laws as related to your collection methods. Collection agency laws extend beyond simply getting customers to pay their delinquent debts.

You may also need to learn how the changes to the Fair Debt Collection Act may relate to customer access to credit reporting information. They may wish to verify the information listed on their credit report, so you need to be sure the information you provide is always accurate. Business owners that don’t adhere to these laws may face some steep fines and they may even find that the debt owed to them could be discharged.

Debt collection is a difficult process, but as long as you stay abreast of the debt collection laws, collection agency laws and how these determine the actions you can take legally to recover the money owed to you, then you may find it not as difficult as it might sound.

Knowing what legal actions you can take can also help you with creating and building successful debt collection strategies, wherein you are able to properly communicate with your debtor and recover the debts owed to you.

David P. Montana has been a well known enterprise expert, business consultant and also author in debt collection agencies solutions for 30 years. He offers further important recommendations and details about debt collection laws.

Effective debt collection techniques are necessary to any business, regardless of the state of the economy. Knowing how to persuade your customers to pay their delinquent, past due accounts on time will increase cash flow to your business. After all, as a business owner, you have debts to pay as well. Absent the necessary adequate cash flow, you are risking falling behind on your own bills and commitments. This can lead to problems with your vendors and suppliers. Or to the loss of favorable credit terms with your banker or lender.

Learning how to master your debt collection techniques can mean the difference between surviving and thriving for your business.

Here are the top 3 debt collection techniques to improve your business cash flow:

1. Change Your Payment Terms

Make sure you’ve clearly stated on your invoices, and any quotes you’ve provided, what your payment terms are. Most businesses allow 30 to 60 days before payment is due, but have you considered reducing your payment terms to 14 or 21 days?

Amending your payment terms can mean that you could potentially be receiving your money sooner rather than later. It also means an unpaid account becomes delinquent within a month so you’re within your rights to commence collection services before too much time has elapsed.

2. Written Reminders & Follow Up Calls

Once an account goes past due, you should send a reminder statement to the delinquent customer to encourage payment of the past due bill. Be careful in your letters, and use gentle language, as the laws governing debt collection techniques are quite specific. Also, by sending written correspondence means you have a record of your attempts at collecting the past due account, in case future issues arise.

You may also choose to call the customer to remind them of their outstanding debt and to inquire about an estimated time frame in which payment will be made. You also need to be very careful about your wording and especially the timing of your call.

Under the Fair Debt Collection Practices Act (FDCPA), debtors are afforded certain protections. Make sure you follow these laws and guidelines, whichever methods of contact you choose.

3. Outsourcing To Third Party Collection Agencies

Sometimes no matter what you do, your debtors still won’t pay their debts. Even if they are experiencing severe financial hardship of their own, this doesn’t help your business if they’ve received goods or services in good faith and then suddenly found themselves unable to pay the bill.

If you’ve exhausted all other avenues of debt collection options, then it may be time to call in a third party collection agency to pursue the outstanding balance on your behalf.

Debt collection agencies are experts, and well experienced in the area of collecting past due monies. They are also fully knowledgeable of the laws, guidelines and regulations governing their industry. Representing your business, they will act on your behalf to collect the outstanding debt owed to you. The debt collection techniques used are designed to bring positive cash flow back to your business, sooner rather than later.

David Montana is a well known specialist, consultant, publisher, and a veteran for 30 years in debt collection agency options. He also gives additional useful strategies and options on collecting debt.

The debt collection industry has become more and more competitive as delinquent debt totals rise and the economy continues to suffer. Commercial collection agencies are in demand as a resolution to lost income based on unpaid bills and uncollected debts. As such, these agencies have profited greatly from their endeavors and insight into the industry.

There are a number of reasons that commercial collection agencies enjoy greater success in debt collection than internal accounting departments and private debt collection attempts.

Commercial collection agencies are well versed in the industry, with greater knowledge and experience than businesses. Typically, a business owner will train employees in daily accounts payable and receivable procedures but not in debt collection functionality. This leads to a lack of focus on recovering delinquent debt.

By comparison, commercial collection agencies focus on nothing but training for the debt recovery process. There is no time dedicated to other procedures, and rigorous training is undergone by all parties within the company.

In addition, resources become a hindrance for internal collections departments, whereas commercial collection agencies have practically unlimited resources. There is never a need to borrow manpower from another department to chase down payment on delinquent accounts, as this is the sole focus of the business. And all funding is put into debt collection procedures.

Commercial collection agencies are also more successful because they don’t have to cultivate trusting, friendly relationships with their clients in order to retain business and income. Unfortunately, businesses rely on customers to fund their companies, and often, the need to keep a good reputation trumps the need to collect delinquent debt.

The commercial collection agencies need not worry about gaining favor from debtors and may, by contrast, be much more aggressive in their debt collection pursuit. If the agency is ever tasked with contacting the same individual again, it is simply because that individual missed the opportunity to pay another account on time.

In the debt collection industry, commercial collection agencies have the benefit of superior knowledge, resources, and experience in the industry. They are unique among businesses. At the same time, other businesses wishing to pursue debt collection internally could take a few pages from their playbooks and achieve greater success.

To add, explore more important facts and resources on commercial collection agencies, as well as collection agency options.