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How Do Business Collection Agency Services Keep Companies Compliant?

Any small business that extends credit to its clients and customers must be prepared to deal with collections. In this challenging economy, the spotlight is thrown on the credit process in general; specifically how credit is granted and how its collected. Staying compliant with debt collection laws is tricky, and its critical to the success or failure of a business. Thats why many companies are turning to business collection agency experts to help deal with the changes.

Business Collection Agency Statistics: Industry Trends

A savvy method of understanding how important collections are in the life cycle of a business is to examine the trends that have shaped the industry. ACA International, the Association of Credit and Collections Professionals, reveals several key developments in small business collections that every small business CEO should be aware of:

  • A Multi-billion Dollar Industry. Outsourced collection agency services recovered $40.4 billion and earned $17.5 billion in 2007
  • Putting America to Work. The industry supported between 300,000 and 420,000 jobs with a payroll ranging between $11.5 billion and $15.9 billion in 2007
  • Growth on the Horizon. The U.S. Bureau of Labor Statistics predicts that the industry will add 23 percent to staffing roles through 2016

Collection Agency Services: Why Compliance Matters

The Fair Debt Collection Practices Act (FDCPA), the primary federal law regulating third-party collection agencies, protects consumers from unfair and abusive collection practices. This piece of legislation includes an intricate collection of dos and donts that small business must abide by in order to comply with federal guidelines. Running a business is complex enough, but understanding these rules can be more than a company can handle. Thats why collection agency services have become an integral part of operations. Small Business Brief writer Joel Walsh highlights a few of the critical aspects of the FDCPA worth mentioning:

  • Forbidden Practices. Such as collecting more than the actual debt, pursuing debts in dispute, contacting the debtor during disputes or depositing post-dated checks
  • Forbidden Communications. Such as posing as a government agency, sending non-legal forms, threatening arrest or posing to sue without the authority to do so
  • Forbidden Disclosures. Such as giving incorrect credit-related information, sharing debt information with non-involved parties or contacting other parties more than once

Collection Agency Partnership: Empowering the Process

There are several key practices any small business can do that will help the business collection agency do their job better--activities that can grease the wheels of the collections process so that valuable resources arent wasted. Business Know-how writer Barbara Brabec reveals a few of them:

  • Setting the Ground Rules. Explicitly outline the payment process, including what is expected of clients and customers
  • Establishing a Contract. A formal statement showing payment expectations and consequences for non-payment
  • Providing Positive Communication. This may include emails, phone calls, and hardcopy letters as reminders of pending payments

The bottom line is that the process of collections is precisely that--a process that proactively handles any situations that could hamper timely payment. After all, the reputation of the business and the customer is at stake.

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