A Step by Step Guide to the Commercial Debt Collections Process


If you're struggling to recover unpaid debts, commercial debt collections may be the solution you're looking for. Explore the stages of commercial debt collections and learn how to establish effective payment terms.

What are commercial debt collections?

Commercial debt collection refers to the process of business-to-business debt collection, recovering debts owed by one business to another, such as unpaid invoices or missed repayments. 

If a business is withholding payment, the creditor has several options: they can reach out and offer a payment plan, negotiate the amount owed, or pursue more aggressive methods, such as hiring a third party collection agency with experienced commercial debt collectors or onboarding a debt collection attorney to collect what they’re owed through the courts. In some cases (like Monetaria), a number of collection agencies have experienced commercial debt collection attorneys on staff, to easily pursue legal remedies if it becomes necessary.

Recovering commercial debt entails various phases. Businesses must have a well-defined strategy to manage and recover unpaid debts, as each phase is a key to the overall effectiveness of the process.

Related: What is Commercial Debt Recovery and Collection?

What Happens During the Pre-Collection Phase?

A successful and efficient debt-collecting process depends on the pre-collection stage, before you ever have to deal with difficult debtors.

Every business should ensure that procedures and policies for managing unpaid debts are created and preparations for the collection process are made that can be executed quickly when it becomes necessary.

Some policies to consider are establishing specific payment conditions and procedures, developing open communication lines with clients to guarantee they know the payment processes and the consequences of non-payment, and ensuring the collection of  accurate and relevant documentation and tracking of invoices and payments. These records might be used as proof in court cases or to monitor development during the collection procedure.


Beginning Commercial Debt Collections

The procedure for recovering unpaid debt starts when it becomes apparent that your client will not pay you back easily.

Creating a collection process involves taking specific steps to ask clients for payment of unpaid bills.

The beginning of collections involves sending a letter laying out the sums owed, the options for paying it back, and handling client responses and objections. Be prepared to be busy answering customer questions, dealing with criticism, and, if necessary, organizing payment arrangements or settlements, or alternatively hearing nothing from them, if the debtor has decided they won’t have to pay you back if they ignore you.

Related: Understanding Commercial Debt Collections

This whole time, you should also be collecting and organizing all the documentation and communication you’ve had with the debtor, including information of the services you’ve provided them and all emails and notes you have from the account.

If the client doesn’t respond or pay, the claims process may need to be taken to the next level. This might involve filing a lawsuit, engaging with debt collectors, or exploring other ways to recoup the debt.


Legal Steps To Consider for Commercial Debt Collections

Legal action may be required to recover unpaid debts when other debt collection measures are unsuccessful. The legal actions phase involves using lawful means to pursue  debts owed.

Businesses can file a lawsuit, get a judgment, and garnish a debtor’s  bank accounts, among other legal tools for pursuing debt collection. Companies should consider the costs and benefits of taking legal action before deciding if they have a good chance of retrieving the debt.

Generally, when a lawsuit is filed, a summons and complaint must be served on the debtor, and proof must be shown in court to establish the legitimate debt. A judgment is acquired if the court finds  in the company’s favor, and this judgment can be utilized to garnish bank accounts  or other assets.

During the time of legal activities, working with a collections lawyer can be advantageous. A knowledgeable attorney can advise clients on their legal alternatives and guide companies through the debt collection litigation process. Additionally, they can assist companies in weighing the advantages and disadvantages of taking legal action and, if necessary, offer legal representation. Some collections agencies- such as Monetaria- are lead by expert debt recovery attorneys, which ensures clients have access to their knowledge and expertise from the outset of the process.


We’re happy you found this article informative! Go back to our blog page to find more tips, tricks and guidance on collections, to ensure your business gets paid.

If you have unpaid debts that need to be recovered, commercial debt collection may be a good option for your business. A commercial debt collection agency can help you with the process of recovering past-due accounts and provide guidance on best practices for managing accounts receivable. 

Led by a team of experienced commercial debt collection attorneys, Monetaria Group has helped hundreds of businesses recover and collect their outstanding debts and payments. Schedule a FREE consultation with our expert team to see how we can help you recover your money today!