Debt Collection

Debt Collection means collection of debt from debtors who are not paying their debt honestly. All those who provide the service of debt collection are called debt collection agencies. They take some fees or commission from creditor for collecting the debt from his customers. In risk management, it is very necessary to get the services of debt collection agency. In USA, Fair Debt Collection Practices Act 1977 applies on debt collection and in UK, Consumer credit Act 1974 applies. Both laws protect consumers from debt collector agencies. These laws have made some rules and framework for collecting debt from debtors. Some of debt collection agencies use very motivated way for convincing debtor to pay his debt but others use threatening technique for collection of debt.

5 Steps Used in Debt Collection Process

Ist Step: Calculate the total amount of debt which is payable by debtor.

2nd Step: Send Information to debtor about his payable debt by giving the reference of invoice no.

3rd Step: If Creditor did not collect his debt, he should send reminder letter after week.

4th Step: If there is no response from debtor, contact debtor personally and asks the reasons for not paying his debt. If there are any disputes, try to solve. It may possible, debtor does not want to pay default goods amount.

5th Step: If again, there is no response, take the services of debt collection agencies or take legal action.

Debt Collection Agencies in India

1st Aeren - Debt Collection Agency

AEREN is India's first and only online attorney based international debt recovery specialist that offers total solutions right from early stage collections to legal services covering every stage of the recovery cycle i.e. amicable negotiation, legal negotiation and legal action (litigation) to foreign companies having delinquent accounts in India. It also helps Indian companies to recover their international bad debts, no matter where the debtor is located across the globe.

2nd TCM – Debt Collection Agency

Established in 1991, TCM is a joint participant in the worldwide expanding network of B2B credit management service providers and has rapidly emerged to become Asia's leading credit management organization offering a total solution to all credit management needs.

It is also compliant to ISO 9001: 2008 Quality Management Systems as certified by Bureau Veritas (BVQI).

The network and the expertise that TCM has established across Asia (particularly India, Sri Lanka, Bangladesh, Nepal, Thailand, Malaysia, Singapore & UAE) are unrivaled by any other agency.
Headquartered in Delhi (India), with representation across several Asian countries, TCM has assembled a tried and tested team of professionals and local partners that provide for prompt, Efficient and reliable service.

Debt Collection Strategies

Debt collection strategies are technical planning for collecting debt without losing reputation among debtors. In debt collection strategies, creditor uses step by step process for getting his debt. He also tries to understand the situation of debtors and provide more opportunities for paying his debt easily. You can also negotiate with debt collection agencies. If you have not collected your debt yourself, you can sell your debt to debt collection agencies. Collection agencies purchase debts from creditors usually for less than 10% of the original value. This makes your negotiating position much stronger than it might initially appear.  Keep negotiations to letters and faxes. Never agree to a transaction over the phone. Demand all agreements in writing and save all correspondence.

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Accounting Education: Debt Collection
Debt Collection
Accounting Education
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