Businesses find they can choose from several options when they have unpaid debt on their books, as what works for one business might not be appropriate for another, PacificCollectionGroup.com states
— In 2018, Urban Institute reported 71 million American adults currently have debt in collections. The organization determined this by evaluating figures from the US Census Bureau and obtaining information from the credit reporting agencies. Currently, 252 million individuals ages 18 or older live in the country and 224 million have a credit file.
The organization used a random sample of these individuals to estimate 71 million adults currently have one or more debts in collections based on information obtained from these credit files. That works out to 31.6 percent of those that have a score from a major credit bureau.
Business owners need to be concerned about this, as a loss of payment from one or more customers equals a loss in profit. Debt collectors, such as Pacific Collection Group, work with businesses to recoup all or part of the funds owed by the consumer. However, care must be taken when attempting to recoup these funds, as unsavory tactics can leave a business with a bad reputation.
The Consumer Financial Protection Bureau recently released its Spring 2019 Semi-Annual Report of the Bureau. This report found that 24 percent of complaints coming into the agency were related to debt collections. Businesses must take note of this and find ways to receive the monies they are owed without alienating the consumer in the process.
Furthermore, business owners must determine at what point they wish to pursue collections. The median amount of money owed on debts in collections is only $366 while the average amount is roughly $1,000. Medical debt is even lower with the median amount owed on this type of debt coming in at only $207 and the average amount is only $579.
Fortunately, debt collection agencies offer multiple solutions for business owners so each organization can select the one that best meets their needs. One business, for example, might find they wish to sell their portfolio of unpaid debt to the agency rather than form a partnership to collect these funds.
With this option, a company can clear its books of unpaid debt by selling it to an agency for a portion of the balance owed. This offers an immediate resolution for the business holding accounts receivable. Once the debt has changed hands, the business removes the accounts from its books and no further action is required on the part of the company. However, this is only one of many options.
Percentage-based collections are another solution that should be considered. Companies selecting this option often find they recoup the funds owed to them in less time and with little effort on their part. As the agency brings experience in collecting this debt to the table, the business has a better chance of receiving the funds.
A business might choose to take a debtor to court to obtain the funds that are owed. A favorable decision for the plaintiff, however, does not mean the funds will be forthcoming. Additional legal action might be required, and an experienced debt collections agency can be of assistance here also.
Consider all debt collection solutions before deciding which method to use. As every company deserves to be paid for their products and services, this is one area that should never be neglected. Seek help in recouping these funds to keep the business up and running while making a profit. This is why owners go into the business in the first place, and they deserve nothing less.
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