Commercial Collection Agencies and Skip Tracing Services

One of the biggest problems that debt collectors often face is locating debtors. When a debtor moves to another house, city, state, or country, the collection agency often has no clue how to locate him. So, how does a commercial collection agency track runaway debtors? The solution is easy: skip tracing services. What is Skip tracing? Skip tracing is the process…

One of the biggest problems that debt collectors often face is locating debtors. When a debtor moves to another house, city, state, or country, the collection agency often has no clue how to locate him. So, how does a commercial collection agency track runaway debtors? The solution is easy: skip tracing services. What is Skip tracing? Skip tracing is the process of locating the whereabouts of a person for any number of reasons. In this case, outstanding debts.

Skip tracing services (Skip tracers) are companies whose sole mission is to locate individuals – in this case, debtors – who have relocated without giving their new contact details to the collection agencies. Skip tracers are employed to help commercial collection agencies find the addresses and contact information for debt collection purposes.

You may wonder how skip tracing services locate people; the process is actually rather straightforward. The easiest way is to use the debtor͛s social security number. Social security numbers are run through various credit bureaus allowing them access to ͞header͟ files from the debtor͛s credit files and/or credit reports. A header file contains just the basic information needed to locate the debtor such as name,address and in some cases, place of employment. Though this information may not seem like much, it is often times all the skip tracers need to help debt collectors find their debtors.

If the skip tracing services are unable to locate the debtor through their social security number, they can perform a national identifier search. Simply put, this is an “old school” system that uses the debtor͛s last known residence as well as his/her name to find their new location.

Skip Tracing Services may use the following resources:

  • Online directories, Phone books, Social Sites and search engines – Debtors may have accounts and profiles across various directory websites and Social Media sites like Facebook, Livejournal, Twitter, Instagram, and others. If not, skip tracing services can use search engines to search for news articles and posts that people on the internet who may have written entries about them or even posted pictures.
  • The Department of Motor Vehicles (DMV) – If the debtor drives a vehicle or has a license registered, it is likely that the DMV will have recent information about the debtor’s whereabouts.
  • Employers – If you know the debtor͛s last place of employment, skip tracing services can approach their boss and inquire about their current employment status. Even if the debtor has moved on to a different job, the employer may still have information that can help the skip tracer locate him
  • Associations, Affiliations, Organizations, and Groups – If the debtor has a specialized occupation, like Engineering or Medicine, they must have membership in certain organizations. Skip tracing services will try to search these various groups to find the runaway debtor.
  • Former contacts – Skip tracing services may visit old neighbors, friends and relatives to obtain information about the debtor͛s current location.

Note: when trying to obtain information about a certain debtor, skip tracing services should never falsely represent themselves as a member of law enforcement or a detective. It is in your best interest to ensure the commercial collections agency you use for your debt recovery steers clear of any and all misrepresentation.

Debt Collection Strategies – Invoice Finance Charges

Are your debt collection strategies like most business owners or are you cashing in on slow paying customers by implementing Invoice finance charges and interest? Debt Collection Strategies: Interest & Finance Charges…

Are your debt collection strategies like most business owners or are you cashing in on slow paying customers by implementing Invoice finance charges and interest?
Debt Collection Strategies: Interest & Finance Charges

Imagine for a moment applying for a loan at a bank. You sit down with the loan officer and somehow manage to obtain a loan for $5,000 at 0% interest. Sounds a bit far-fetched and a little foolish on the part of the bank, doesn’t it? After all, why would a bank loan you money without interest? There’s nothing in it for them; there’s no financial gain for them in taking the risk

However, that’s exactly the kind of “foolishness” you and your business are engaged in with your debt collection strategies if you are not charging interest on your delinquent accounts. In fact, it’s even more so. After all, banks don’t really need the money, however, your business does.

Most businesses are in constant need of capital. In such cases, it is common for a business owner to borrow money from some sort of financial institution, be it a bank, private lender or other business capital. Regardless of the source of the loan, the business will have to pay a finance charge and interest on the money that they borrowed. And yet, no finance charges or interest payments exist in their debt collection strategies and invoicing system when attempting to collect the monies they are owed.

You may find it surprising that when implementing interest or finance charges into your outstanding debts, not only will payment be made faster, you will often receive the interest payment as well. It is a well-known fact that most companies will pay interest bearing invoices first and will relegate non-interest bearing invoices to a later date, often waiting until collection procedures have started. Most businesses use a revolving line of credit. By not paying the outstanding bill, your customer is able to earn, you guessed it, interest on that money

A question you need to ask is how important your services or products are to the vendor. If you are non-essential to the customer, you may find your invoices overlooked in favor of more ͞essential͟ suppliers. Having implemented finance charges into your invoices gives you leverage over the other vendors who do not. Remember, when sending an invoice to a customer, you are competing for their next available accounts payable dollar. It is how well you compete for that dollar that determines your success.

Another factor to consider, by having a finance charge in place, you gain leverage over your customers by having the ability to waive the finance charge in lieu of timely payments.

By applying interest/finance charges to your accounts payable and debt collection strategies, you will help speed up the payment of your invoices by training your customers to either pay according to your terms or to take advantage of your offer to extend your accounts receivables and pay the interest cost. What you will find is that customers will often prefer to extend the collection period paying the interest instead.

Think of debt collection strategies as a chess game: you need to outthink your opponent and stay at least one move ahead of them.

Debt Collection Software VS. Hiring a Collection Agency

Debt collection software are programs designed to help companies track debts. These software programs are designed to keep track of your outstanding receivables, payments owed, fines, penalties and other matters concerning the accounts of debtors. But is it beneficial for a company to buy and use one of these software tools or is hiring…

Debt collection software are programs designed to help companies track debts. These software programs are designed to keep track of your outstanding receivables, payments owed, fines, penalties and other matters concerning the accounts of debtors. But is it beneficial for a company to buy and use one of these software tools or is hiring a commercial collections agency a more reliable option?
The Benefits of using Debt Collection Software VS. Hiring a Commercial Collection Agency
The Benefits of debt collection software
First of all, debt collection software can help you get organized. Instead of having piles of paperwork in the office, debt collection software can consolidate all the information in one place. At the same time, debt collection software can be easily updated. Once the debtor pays a certain amount, it can be easily recorded by the software. This way, you can keep better track of the activities in each account. You will have all the necessary information, including the date and time payment was made and the amount that was paid.

Second, debt collection software is a great way to keep track of your correspondence with your outstanding accounts. Debt collection software has features that allow you to record the exact day and time the collection letters were sent–– In some cases, debt collection software can even record portions of phone calls. If ever the case goes to court, you can use the software to show evidence that you tried to maintain correspondence with the debtor.

Lastly, using debt collection software can often be a cheaper alternative to hiring a commercial collections agency to track accounts for you. For smaller businesses, hiring an external agency or person to do organization and collection of debts can be a bit costly. Debt collection software can prove to be a cheaper alternative

The Benefits of hiring a Commercial Collections Agency

Software programs are tools that can be used to retrieve the funds that are owed you. However, they are just that, tools. And a tool is only as good as the experience of the one using it. With a commercial collections agency, expertise and experience are two things that come with the service and normally exceeds even the most robust programs. Having that expertise working for you improves your chances of recovering some, if not all of the amount you are owed. Agencies often use professionals to collect your money using proven techniques and systems to optimize success

The primary benefit of using a commercial collections agency over debt collection software is the whole point of using them it in the first place: getting paid. By using an agency, you outsource the collection process allowing someone else to aggressively pursue your collection efforts. When debtors are contacted by a collections agency, a certain amount of fear is instilled into the debtor. Without that fear, debtors may be less inclined to respond and are often less concerned about the risks of not paying you what they owe. The consistent and aggressive pursuit of an agency offers a better return on investment for you recovering most if not all of your outstanding receivables.

Documentation is an important factor. A collection agency will keep track of all of their correspondence and collection efforts including direct mail, email, telephone calls, and in-person collection attempts, noting any comments made by the debtor and/or any amounts that have been paid. In doing so, collection agencies put together a timeline and help solidify your case should you choose to sue the debtor in a court of law. As mentioned above, debt collection software will keep track of all of your correspondence, however, it is up to you to input all of that data.

The most important factor of all: time. The software you use should help make debt collection easier. It should help you monitor the accounts, and in the event that the debtor disputes the debt, you can easily use the debt collection software to verify the nature of the debt. Though debt collection software can aide you in the tracking, documenting, and collecting of outstanding debts, it still requires time on your part to monitor the activities, input the information and pursue collection efforts; not to mention all of the time necessary to learn the software in the first place. Your focus as a business owner should be on your business; obtaining new customers and maintaining relations with existing customers needs to be a priority. You need to weigh your time and decide whether your business can afford you spending precious time performing your own collections or if outsourcing the task is the better option.

So which is it, Debt Collection software or Collections Agency?

In the end, it comes down to what is the best fit for you and your business. Whether you use a commercial collections agency or debt collection software for your recovery efforts, the choice is entirely up to you. With either option, there is no guarantee you will recover what is owed. With a commercial collections agency, there is usually a set of standard processes that they follow in an effort to retrieve the outstanding debts. With Debt collection software, whatever processes are used will be entirely up to you.