Every debt collection situation is different, which is why there are commercial debt collection laws in place to protect both businesses and their debtors. These laws are to be abided by and can help guide both collection agencies and debtors in the case of overdue payment.
At Summit A•R, we have over 26 years of experience with debt collection in North America and are well versed in the laws outlined by each state.
When you are aware of the commercial debt collection laws and legislation in place in your state, you can avoid commercial collection errors and better understand the role of a commercial debt collection agency.
Consider these prominent commercial debt collection laws and how they can help guide your debt collection experience.
Statute of Limitations
The statute of limitations determines how long a business has to sue a debtor over their unpaid bill. There is both federal and state-based legislation in place to determine how long a creditor can collect debts.
Each state has their own statute of limitations on debt, i.e., own timeline. The type of debt owed will also determine the statute of limitations.
Important Business Debt Collection Laws
Business collection laws are designed as legal statutes to protect both debtors and creditors. Consider the debt collection laws that a business should be aware of when pursuing commercial debt collection.
CCAA Code of Ethics
As per the Commercial Collection Agencies of America (CCAA), it’s essential that its members abide by the CCAA Code of Ethics. This code asserts that a collection agency must comply with the following:
- Operate with honesty, fairness, and empathy
- Refrain from activities that may reproach the industry or agency
- Not perform any legal duties
- Avoid making statements or sending materials that can be perceived as “deceptive”
- Refrain from harassment of any kind when dealing with creditors
- Never threaten to contact the financial institution or vendor of a debtor
Commercial Debt Collection Regulations
There are various regulations put in place to also protect creditors and their debtors, with unique regulations being present for each party. Business-specific regulations include:
- Starting the Collection Process: The debt collection process can only begin when there is a past-due payment. Once this past due payment appears, a business must send a letter to the debtor before transferring the relevant files to a debt collection agency. Only then will an agency proceed with collections.
- Sending Written Statements: When a business or its collection agency sends documentation regarding collection efforts, all information included must be verified and valid. Any false data will be considered a breach.
- Threats: Under no circumstances should an agency or creditor threaten a debtor.
- Professional Assistance: When a commercial business has a collection agency working on their behalf, the agency will have access to professional assistance in the form of solicitors or bailiffs.
Fair Debt Collection Practices Act (the FDCPA)
It is important to note that, while the Fair Debt Collection Practices Act regulates business debt collection laws, it is not applicable to commercial debts. While there are no federal laws in place in the U.S. regarding this, there are other organizations, statutes and acts that regulate commercial debt recovery.
- CCAA- Commercial Collection Agency Association
- controlling certified commercial debt recovery agencies
- the Commercial Law League of America
Note that every state has its own unique set of commercial debt statutes.
How to Avoid Late Commercial Payments
It is easy to get lost in your days, weeks, and months, but a payment plan can be enforced to avoid late payments. The Limitations Act gives the creditor two years since the last payment, so it’ll be vital for the debtor to avoid any potential late transactions.
When you create a clear and concise payment schedule, it will be helpful and easier to understand and meet deadlines. Your payment plan can include when you want the final payment date to be, which day to pay etc.
Technology’s Here to Help
We have advanced technology, and it is time to use it. Create alerts, invoicing tools, bookkeeping and other resources to help you get back on track and avoid future late payments.
Give the debtor a chance and offer potential installment plans. A compromise is a sure-fire way to avoid any possible late fees.
Hire a Debt Collection Agency
Commercial debt collection agencies have used unethical practices in the past, but at Summit A•R, we do things differently. When you hand your unpaid bills to us, we recover your lost revenue without alienating your clients.
Our team of professionals is here for you each step of the way to ensure there are no unlawful practices. Summit A•R’s “P.H.D. Philosophy” (Preserve Human Dignity) approach ensures that the company treats everyone with professionalism and integrity at each step of the debt collection process.
The commercial debt collection laws are in place to avoid harassment and allow both the debtor and creditor to pay the unpaid bills. With Summit A•R, you can expect:
- Trained and licensed collection professionals
- No threats or aggressive tactics
- A skip-tracing department by a licensed private investigator
- No hidden or minimum costs
- Perfect Better Business Bureau rating
When it comes to commercial debt collection laws, you must abide by the timeframe and let the clients know. You must act now if you want an account resolved.
For future clients, who have experienced poor debt collection in the past, we encourage you to look at our mission statement that showcases the principles we have built our business on:
We Value Our Clients
Our client’s reputation is our top priority. We have a responsibility to your business and take that seriously.
We Love Our Team
Our hard-working team of rockstars achieves excellence in an environment that encourages respect, integrity, and humour.
We Respect People
We follow the commercial debt collection laws and regulations of our industry. We choose to treat debtors with the compassion, respect, and dignity that everyone deserves.
We Give to Our Community
We give back to our community with our resources, energy, and time.
Commercial debt collection laws are in place to protect the debtor and to ensure that the debt collection process is done fairly, without any aggression and with patience in mind.
Find out today how Summit A•R can handle your commercial debt collection!