February 6, 2015

How To Prevent Debt Collection

So here is the situation, you extended credit to a new customer for a large amount.  You were excited to have the business, as any business would be, but you did not perform the due diligence.  Everything seemed to line up, they had a website and looked like a good company.  Now 30 to 60 days later, they have not payed and you are out the merchandise.  Sound familiar?  It is not a fun situation, but how do we rewind and prevent this mess from ever happening.

The first step in the whole equation is to perform some research on the company or individual.  There are many online credit reporting services that will perform a search.  This search will bring up any red flags.  These can be the signs that prevent you from getting yourself into a debt collection nightmare.  Some of these signs include: court judgments or summons, credit inquiries, and written off accounts.  These red flags should be forewarning that no credit should be extended to this customer.  If you are dealing with a troubled customer, then require them to pay cash or go elsewhere.  This may keep you from making a couple of sales, but will be well worth it in the long run.

I have known many customers who were doing good business with a customer for years and all of a sudden this trusted customer was unable to pay.  A big problem with this is that over time the amount of credit that is issued to a customer gets larger and larger.  If you have a good relationship with another business, then you will be more likely to extend larger terms of credit.  So how do you prevent this from becoming a trouble spot for your business?  It may seem like this is tough to prevent, but there are some key warning signs that can foreshadow impending financial trouble.

Some signs to look for with current customers are the payments coming in regularly?  If they are sliding from 30 days to 45 and so on, then this should be a red flag.  Then you need to tighten the terms of credit to protect yourself.  Is the company not paying in full?  If they are only making partial payments, then you need to be cautious.  Look for any changes in their payments, whether timing or size, because this can predict financial troubles.

Be on the look out for trouble spots before you make a sale and afterward.  Forewarned is forearmed.

February 3, 2015

Florida Collection Agency

Are you looking for a Florida collection agency?  There are a lot of choices out there, but hopefully in this article we can help you find the best of the best when it comes to Florida collection agencies.

Florida is ripe with debt collection firms.  Why is this you ask?  Well, Florida has different laws which allow non-commercial collection agencies to collect business debt as long as they do not collect over half of business debt.  This effectively allows consumer collection agencies to collect business debt at the same time.  In general there is not as good of money in consumer accounts.  They are also harder to collect, due to the legal restrictions with the FDCPA (Fair Debt Collection Practices Act).  This puts limits on what tactics collection agencies are able to use.

So with this in mind, how do you go about sifting through the huge number of Florida debt collection agencies?  First off do a search about the company and see what you can find.  If there are a lot of negative reports about them, then you want to move on to the next agency.

How long have they been in business?  This is very important because most second rate organizations do not stay in business for more than 3 years.  If you are working with a company that has been in business for longer than this then you are more than likely dealing with a professional debt collection firm.

After you have found a minimum of 3 Florida debt collection companies that you are interested in hiring, call them and see what their rates are and make sure they work on a contingency basis and guarantee collection.  You should not have to pay any upfront fees and be cautious of anyone that asks for them.

Good luck in your search for a Florida collection agency.  Choose wisely and let a great organization represent you.

January 25, 2015

3 Reasons Why Collection Agencies Might Go out of Business

Filed under: Business Debt Collection — Peter Pinette @ 1:02 pm
Collection agencies might be a thing of the past if any of these issues come to fruition.  Everyone knows that collection agencies collect bad debt, which has not been paid.  Nobody likes receiving a call from a collection agency reminding them that they need to pay money.  So, if you want to put collection agencies out of business here is what you should do.
Number 1, do not pay for anything on credit, unless you are able to pay it back immediately with cash.  Credit is the lifeline of any collection agency, and if you start paying in cash, you are drying up a collection agencies well.  This may be easier said than done for a lot of people, but if you make a budget and are more mindful of your spending, then you can make a difference.
Number 2, hinders on the legal system.  Over the years collection agencies have been constrained more and more by laws that do not allow them to use shady debt collection tactics.  These are necessary rules, because a lot of businesses would be abusing debtors left and right, and this is called harassment.  These laws are necessary, but everyone knows that a justice system can be abused by greedy lawyers.  If the legal system changes puts any more pressures on collection agencies, then they might be forced out of business.  Keep your eye on this, as this could be the most crippling blow to the debt collection industry.
Number 3, is also contingent on the legal system.  There are certain states where collection agencies are able to operate as commercial collection agencies under a consumer license, as long as 51% of their claims are consumer.  This is a loop hole that allows consumer collection agencies to pursue commercial claims, where the real money is.  It is much more expensive to operate a strictly commercial license, so many collection agencies use a consumer license to go after commercial debt.  If this law is changed in any state, then the number of collection agencies could start shrinking.
Any of these 3 changes could make a huge dent on the collection agency industry.  Keep your eye on this, whether you are a consumer or a collection agency.

January 8, 2015

Transportation Debt Collection

Transportation is a part of business.  How do you get your product to the right place at the right time?  There are many options to use for transportation and not all are equal.  A big problem that many shippers run into is not being paid on time.

Shippers move items from point a to point b.  The items are not theirs, but are shipped by companies and individuals who agree to pay the shipper for their services.  The average consumer has to pay for these services beforehand and is not able to pay on credit.  The larger volume shippers are able to ship on credit because they represent a larger portion of a shipper’s business.

Transportation debt collection is necessary for businesses when one of these large customers does not pay for their shipping services.  What makes things interesting is when this involves international shipping and the parties are from different countries.  Laws change as you cross over border lines and this makes collecting transportation debts a challenging process.  Whether this involves a cargo ship or cargo airline, the challenge is finding out who is on the hook for the unpaid funds.

A good transportation collection agency will be able to track down these people and motivate them to pay.  What makes collecting transportation debts difficult, is that not every country has the same laws as the United States.  It is much easier for a debtor to hide behind country lines.  Phone service and means of contacting the debtor may not be as reliable.  So how do you collect an international transportation debt?  The best thing to do is to turn the account over to a specialized debt collection agency with forensic corporate debt collection capabilities.  This will give you the best chance in collecting the overdue debt.  You can try to collect the debt yourself, but when you cross international border lines the complications grow exponentially and it is best to let a true professional organization handle the claim.

January 5, 2015

Debtor Profiles

Filed under: Collections Advice — Peter Pinette @ 10:14 am

An understanding of typical debtor profiles will help a collector categorize a delinquent account, weigh collection potential, and map a collection strategy. The most common types of debtor include the following:

• Prompt payer. This debtor pays bills on time, is a good risk, and represents the majority of credit account holders.
• Slow payer. This debtor resorts to stalls, broken promises, and tends to procrastinate. There are two subcategories:

1. The unintentional slow payer falls behind in meeting obligations because of circumstances, but ultimately does come to terms with creditors. The unintentional slow payer is the easiest of all collections to effect.

2. The intentional slow payer initiates ploys to evade payment, has the earmarks of a potential skip, may be contemplating bankruptcy, or has taken steps to make himself judgment-proof.

• Careless debtor. This debtor is not concerned with details, is often negligent, and usually disregards payment notices.

• Recalcitrant debtor. This debtor takes the position that the debtor is in control. This debtor will pay debts at his convenience, on his own terms. This kind of person will challenge the creditor on every front, but ultimately will meet the obligation.

• Impenetrable judgment-proof debtor. This debtor is a virtuoso at the art of concealing assets, does not respond to pressure, makes a mockery of the legal system, and thrives on controversy.

• Deadbeat. This debtor never intended to satisfy the obligation. The debt was incurred with intent to defraud. This debtor is an out-and-out credit criminal.

• Liar. This debtor, a habitual or pathological liar, propounds reassurances. This person usually pays at the eleventh hour, when litigation ensues or when he fears other consequences in greater proportion to the amount of the debt. Discretionary corporate debtor. Maintains an exemplary payment history with select creditors (owing to maintenance of a relationship), but defaults on obligations where this mentality customer has no further use for creditors. Most common in corporate environment (i.e., officer pays his consumer debts but defaults on corporate obligations).

• Skip. Skips come in two categories:

1. The unintentional skip moves out of town without paying, but leaves a forwarding address and is easy to locate. Usually, this debtor is easily motivated to satisfy the obligation.

2. The intentional skip does not leave a forwarding address and covers his tracks. In this respect, the intentional skip, depending on the person’s degree of expertise, can range anywhere from mild (i.e., minimal effort to locate) all the way to the “professional” skip, who initiates extraordinary maneuvers to evade creditors. Nonetheless, even the professional skip does leave a paper trail that a proficient skip tracer can follow.

• Discretionary consumer debtor. This type of debtor tends to pay primary bills (i.e., Telephone Company, utilities, and prestigious credit cards) but ignores such other bills as department store invoices, minor charges, mail-order transactions, and so forth. This debtor is a “schizophrenic” personality, usually has a good credit rating, and knows which credit transactions are reported. An unsuspecting credit grantor might be misled as a result of this debtor’s favorable credit profile. (See Chapter 8 for more on credit profiles.)
• Intermediate credit criminal. This type of debtor deliberately, and with actual malice, makes a livelihood by ripping off creditors.

• Professional commercial “credit criminal.” This is the truly criminally minded debtor. Such a person resorts to elaborate, sophisticated schemes to procure hundreds of thousands of dollars’ worth of credit. Usually this criminal establishes a shell corporation as a front, incorporating a name similar to that of another, legitimate business. The credit criminal, gifted with a “silver tongue,” capitalizes on the legitimate business’s good credit standing to lull creditors’ suspicions and order hundreds of thousands of dollars in merchandise. The debtor will then liquidate merchandise quickly, usually below cost, on a grand scale, and walk away with megabucks, all the while shielded by a corporate umbrella. This professional credit criminal is definitely the most dangerous. Interestingly, this debtor pays most small, common obligations and usually has an impeccable credit history at the consumer level. This debtor may even be a well-respected citizen within a community. This scam is also known as a “bust out” scheme.

• Transient debtor. This type of debtor is a perpetual skip, moving frequently with the intent to evade creditors. This debtor moves out on a Friday night, leaving no forwarding address.

• Threat-of-harassment debtor. This type of debtor threatens creditors with a harassment suit, creates frivolous excuses, makes up disputes, and thrives on beating the system. An expert at fabricating stories as a smoke screen, this debtor is “always right.” Another version of this mentality debtor will threaten a harassment suit by way of an attorney.

Flathmann & Stern, LLC, specializes in business debt collection. They have over 30 years of experience in the industry and are the right choice for your needs. To find out more visit http://www.fsbizcollect.com/ and get your business debt collected. We guarantee your collection or its free! Business Debt Collection. Come and check us out today!

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