Collecting from Consumers Versus Businesses

January 2, 2019

While collecting from consumers versus businesses has similarities, there are many legal and practical differences between the two. If you are a business in need of a skilled collection agency, you need to fully understand the skillsets required by consumer collection and commercial collection agencies.

Collecting from Individuals

Some collection agencies collect from consumers, others from businesses and still others from both. Collection agencies that collect from consumers do so on behalf of businesses or health care providers.  The most common types of consumer debt include medical debt, unpaid mortgage balances, credit card debt and outstanding loan balances. All collections from consumers are governed by the Fair Debt Collection Practices Act (FDCPA), which is designed to protect individuals who owe money to businesses. Specifically, the FDCPA protects consumers from unethical and unfair collection practices. It prevents collectors from using a variety of underhanded tactics including prohibiting threats, harassment and intentional deception.

Commercial Collections

Commercial collections agencies do not collect debts from individuals, but debts owed by one business to another. In most cases, these debts are for products, services and inventory orders that were never paid for. Commercial debt can be collected from businesses of any size and in any industry. While these collections are not governed by the FDCPA, unethical and overly aggressive tactics are still prohibited.

Furthermore, commercial collections can be more complex because, unlike with individuals, most businesses want to preserve the loyalty and reputation that they have with the debtor. This means that commercial debt collectors need to be able to recover debt from businesses without damaging the professional relationship between the debtor and the company that is owed money. This, too, takes a lot of experience.

Key Differences Between the Two

  • Collection Methods: Because the FDCPA governs collection from consumers, the methods for collecting from individuals versus from businesses manner are different. For example, a collection agency can’t contact family members or colleagues in an attempt to collect debt. They also can’t call at 4:00 AM, or other odd hours, to increase the chance of reaching the debtor.
  • Maintain Relationships: Commercial collection agencies understand the right way to collect debt from another business while maintaining the relationship between the two businesses. Using a collections company does not mean that you want to sever the relationship your company has with the business you’re collecting from. The agency may actually be a buffer between your business and your clients’ organization.  Collections agencies understand the nuances of collecting from companies and great agencies are able to maintain your reputation in the process.
  • Laws: Whenever a business cannot pay off debts, it may need to resort to bankruptcy. As a business, it’s important that you work with a collections partner who understands the intricacies of bankruptcy laws and identifying companies that are at a high risk of filing for bankruptcy in order to collect as much debt as possible.

Partner with Alacrity Collections for Skilled Collections

Alacrity Collections is proud to be a leader in commercial collections. We achieve great results that are over twice the national average and treat all of our customers with dignity and respect. We work tirelessly to protect your brand and improve your net returns. To learn more about how Alacrity Collections can assist you and get in touch, please call us at 1-800-752-9663 or set up a phone appointment directly on our representative’s calendar via this link: www.calendly.com/hheemann.