Category: B2B Collections

Understanding Commercial Debt Collection

Post author By Tzali Reicher
Post date March 21, 2023

What is Commercial Debt?

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. Recovering commercial debt can be a complex process that involves identifyingthe parties involved, determining the terms of the debt, and using legal or other means to collect payment.

There are a few ways for businesses to handle their commercial debt collection. One way is to handle the process in-house, using internal staff or the billing department to handle the invoicing and collections efforts. This team can focus on communicating with debtors and is a good option for small businesses with a limited number of outstanding debts. However, larger businesses may find that they lack the resources to devote to debt collection, or that they simply lack the expertise necessary to collect debts efficiently.

In such cases, businesses may choose to hire a third-party debt collection agency. These companies specialize in recovering unpaid invoices and receivables, and can often do so more efficiently and effectively than businesses can on their own, and free up the business owners’ time to chase new business instead of over-investing in delinquent clients. Debt recovery and collection agencies use a variety of tactics, such as negotiating payment plans and exploring legal options to try to collect the debt.

Commercial debt recovery may involve legal action, such as filing a lawsuit, obtaining a judgment, and garnishing wages or seizing assets to recover the debt. Legal action should be a last resort, as it can be costly and time-consuming, but may be necessary if other efforts have failed.

It is important for businesses to have a clear and effective process in place for recovering unpaid debts. This can help ensure that the company maintains cash flow and avoids financial hardship, and helps protect the company’s relationships with its own customers or suppliers.

Regulation of Commercial Debt Collection

Commercial collection services are regulated by a number of federal and state laws. These laws outline the rights and responsibilities of both the creditor (the business trying to collect the debt) and the debtor (the business that owes the debt).

At the federal level, the Fair Debt Collection Practices Act (FDCPA) sets out rules for how consumer debt collectors can interact with debtors. While the FDCPA applies to personal, family, and household debts, and not to debts incurred by businesses, many states have their own debt collection laws that apply to commercial debts, and these laws may provide additional protections for debtors.

In addition to these laws, there are also industry-specific regulations that may apply to commercial debt recovery and collection. For example, the healthcare industry is subject to the Health Insurance Portability and Accountability Act (HIPAA), which has provisions related to the collection of medical debts.

Collection agencies must be licensed and bonded before performing collections in most states, so it is critical to ensure that a third-party agency is qualified and credentialed for commercial debt collections before hiring them. The Monetaria Group is led by a team of debt collection attorneys who ensure that all debts and cases are being handled legally and competently, with no chance of trouble down the road.

Is Commercial Debt Collection the Right Choice for My Business?

When deciding whether to hire a commercial debt collection agency, businesses should consider factors such as the number of outstanding debts, the resources available for debt collection, and the expertise necessary to collect business debts efficiently. A larger number of outstanding debts or a lack of resources or expertise may make it more efficient to use a third-party agency.

However, businesses should be aware that using a collection agency may be expensive, and it’s important to carefully consider the costs and benefits before deciding whether to use one.

Commercial debt collection is a critical aspect of managing a business’s financial health. By having a clear process in place and working with experienced professionals, businesses can effectively recover unpaid debts and maintain a healthy bottom line.

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 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!

Tags commercial collections, Debt Collection, Debt collection lawyers, debt recovery, merchant cash advance collections

B2B Collections Collection Tips

Commercial Debt Collection For Beginners

Post author By Tzali Reicher
Post date February 24, 2023

Business owners are often far too busy running their businesses to actively chase vendors and customers to pay their invoices, but if you’re not getting paid the money you’re owed, the business will quickly find itself without the cash flow needed to continue, much less grow and scale up.

Knowing how to collect what you’re owed is crucial to ensure the financial stability and success of your business. Here is a guide to commercial debt collections for beginners:

What is Commercial Debt?

Commercial debt is a business-to-business transaction debt collection transaction:

Your business provided products or services to another business for it to be able to provide its own services and now needs to collect payment for it. Commercial debt is a common way for businesses to access capital and product, but it must be managed carefully in order to ensure that the company remains solvent and can repay what it owes in a timely manner.

How To Collect Commercial Debt?

In an ideal world, everyone would promptly pay their creditors quickly and easily, but we don’t live in a perfect world.

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.

Why Hire a Debt Collection Agency?

There are many reasons to hire a third-party debt collection agency to help you recover your business-to-business debt. They include (but are not limited to):

Experience and Expertise: A debt collection agency has the expertise and resources to effectively collect outstanding debts that may be difficult for you to recover on your own.

Save You Time and Energy: Collection efforts can be time-consuming and require a lot of effort. Hiring a debt collection agency can free up your time and resources to focus on doing what you do best while letting them handle the intricacies of debt collection.

Tactful and Professional Approach: Collection efforts can be delicate and a debt collection agency can handle the process professionally and tactfully to avoid damaging your customer relations.

Ensure legal compliance: A debt collection agency is familiar with the laws and regulations surrounding debt collection and can help ensure your efforts are compliant with the law.

Increase your chances of collecting the debt: A debt collection agency has experience and expertise in negotiating with debtors and has a higher success rate in collecting outstanding debts compared to businesses trying to collect on their own, without the resources and knowledge of an experienced firm.

Selling Debt To A Collection Agency

Another way of handling a debt owed to you is selling and offloading it to a collection agency.

This means you are transferring ownership of the debt from the original creditor to the collection agency, who will then attempt to collect the debt from the borrower and keep what they can collect.

This is usually done when the original creditor has been unable to collect the debt and just wants to get an even smaller sum so they can move on. The sale of the debt is typically done at a discount, with the collection agency paying a lower amount for the debt than what is owed, reflective of their chances of recovering the full sum.

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

Led by a team of experienced debt collection attorneys, Monetaria 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!

Tags commercial collections, Debt Collection, Debt collection lawyers

B2B Collections

The Complete List of Debt Collection Terms You Should Know

Post author By Monetaria Group
Post date January 11, 2022

Debt recovery is all about staying proactive to stay out of trouble. Before you dive into finessing your bulletproof collection strategy, let’s brush up on some of the most used terms in the biz.

A Definitive Glossary of Essential B2B Collection Terms (and Why They Matter)

Account

A record or file of a debt, opened when you contact a recovery specialist. An account is what you’ll need to reference during the recovery process.

Arrears

A debt that is unpaid or overdue. This is a legal term that will come up often.

Charge Off

Any amount of an account that you no longer expect to be paid. The money is written off as a bad debt for accounting purposes even though the debt is still owed. Note that a charge off will appear on a client’s credit report. This is a last resort option for the creditor.

Collection

The process, from the moment your invoice goes overdue, of seeking money that you are owed.

Creditor

The person who is owed money (that’s you). In legal proceedings, they may be referred as the plaintiff.

Credit Report

A record of a client’s credit history, as reported by creditors and other financial bodies. If there is inaccurate information due to circumstances including identity theft, a client can dispute their credit report. Credit reports are crucial to debtors and may include details of:

Employment
Addresses
Credit inquiries
Credit cards and loans
Accounts
Liens
Wage garnishments

Damages

The amount of money claimed that is yet to be calculated.

Debtor

The person who owes money (your client). In legal proceedings, they’re known as the defendant.

Default

Also called defaulting on a debt. This occurs when a client fails to meet the repayment obligations on a debt, either when they miss payments or stop making payments.

Default Judgment

A court judgment that is made when someone did not file a defense and the plaintiff (creditor) obtains a judgment from the court.. In this case, the debtor will be sent a notice of default.

Delinquent Debt

An account on which a payment is past due. You can report any delinquent account to a credit bureau. Note that when an account turns delinquent, it’s possible to charge off the account.

Garnishment

Through a court order, you can force a debtor’s employer to withhold a portion of the debtor’s wages or bank account to pay an outstanding account.

Interest

The cost of borrowing money or buying goods or services on credit. It is typically calculated as a percentage of the amount due.

Invoice

An itemized list of goods shipped or work complete, oftentimes specifying the price and the terms of sale.

Principal

The initial amount of the debt or the amount that remains unpaid by a consumer. It does not include collection fees and interest.

What’s Next?

Now that you’ve (re)familiarized yourself with the lingo and terminology, it’s time to get to work on a solid strategy. Check out our expert tips on how to devise a collection plan that works for you. If those don’t cover it and you’re still waiting to get paid, then give us a holler, day or night.

Tags Collection Terms, Debt Collection, Debt Terms, Terms

B2B Collections Collection Tips Loan Advice

The Good, The Bad, and the Ugly: Who Should You Extend Credit To?

Post author By Monetaria Group
Post date November 19, 2021

The decisions you make at the end of the day will affect your monthly bottom line. That much is undeniable. So who you give credit to, and how much, plays a vital role in your collection strategy both today and tomorrow.

There are many reasons why over 70% of American small businesses have outstanding debt. Decision-making is definitely one of them. At Monetaria, we work with New York businesses every day. We see over and over again smart individuals choosing clients or loan tactics that go against their best interests. It’s time to change that.

In the article below, we’ll guide you through some quick and dirty collection tips that just about any small business can implement. Save time, save money, and learn how to spot clients that are way out of your comfort zone!

When you’re extending credit, ask yourself the ultimate question: How much risk can your business handle?

The answer to this question depends on a lot of different things, but your profit margin is the most important. High profit margins allow for more risk. If you’ve already taken on a lot of debt and your margins are low, stay away from riskier clients.

Got high margins?

More risk potential.

Got low margins?

Less risk potential.

Investment and investigation are like peanut butter and jelly — an irresistible combination no business can do without.

But how do you know which clients are riskier than others? Well, whenever you extend credit to a business or client, you must investigate their ability to make payments. As a general rule, we recommend that you match your investigation to the level of investment.

The Bigger the Loan, the Bigger Your (Time) Investment

As you offer more credit, you must venture deeper into the business’ financial history. But what should you investigate? Ask and you shall receive.

First, the essentials. We’re sure you already know this stuff, but we’ll offer it just in case you need a refresher. For literally any B2B commercial loan investigation, you should look into the following level one information:

Level One

Business name
Owner and Officer names
Address of business
Duration at that address
Phone number(s) of business

As risk climbs, so too should your research efforts. Here are the level two risk investigation categories:

Level Two

Credit references
Phone number and address of banks where business accounts are kept
Applicant’s accountant

Don’t Forget to Choose the Proper Tools

When conducting in-depth business investigations, it’s also important to leverage the latest research tools. In this case, we’re talking about background checks. There are dozens of suppliers out there, but the best companies to use for client background and credit checks are:

You want to choose one of the above companies because they’ll have the most up-to-date and accurate information. Quick note – the information you get should only be used pursuant to local and federal laws. Make sure you are adhering to local and federal laws about using third party companies to do background checks.

If the business does a significant amount of credit card sales, it’s also worth asking for 2-3 months of merchant statements. You won’t be using them for anything at first, other than getting a baseline for their credit card sales.

Later, if their payments start coming in late, you can ask for a recent merchant statement and compare the two. This is an easy way to verify that, yes, their sales are down, or they have run into a little trouble and may need more time to pay.

Summing Up

The higher your margins, the more risks you can take.
Deepen B2B investigations based on your investment.
Leverage credit tools such as Experian to reduce risk.
Ask for merchant statements to get a baseline on their sales.

When the Good Gets Ugly, You’re Not Alone

Despite best efforts and sound decision making, every business will acquire a client that, for one reason or another, refuses to pay their debt. When that happens, stay calm and keep it professional.

Write them a few honest and direct collection letters. If that doesn’t work, give Monetaria a call. We have over a decade of B2B and Merchant Cash Advance debt recovery experience. Above all, remember that you’re not alone — we’re here to help.

Tags Credit, customer relations, Extend Credit, extending credit

B2B Collections Collection Tips

How to Write a Collection Letter: Avoid These Common Mistakes

Post author By Monetaria Group
Post date August 31, 2021

Running a successful business is about keeping your accounts receivable above water. When you see those relationships start to sink, the effects on your cash flow could be devastating.

So you’ll need to implement the right strategies to make sure your customers pay on time. When you do, you’ll ensure that your cash flow stays in the green and your stress levels stay low.

When customers don’t pay, you must shift your collection efforts into a new gear to recover any outstanding amounts. Collection letters are an invaluable tool you can use to get payment from customers while still preserving your relationship with them.

But where do you learn how to write a collection letter? What information should you include? When should you send it?

At Monetaria, we live and breathe collections. Below, we’ll answer your collection letter concerns in detail. As a bonus, we’ll give you a collection letter template you can use in your efforts.

What Is a Collection Letter?

Before we get into the details, let’s recap what a collection letter actually is. Simply put, a collection letter is a written notification that you send to a customer to inform them about their due payments.

Typically, a collection letter may include payment reminders, inquiries, warnings, or notifications of possible legal action to be taken against a customer if they fail to pay overdue amounts promptly. Ultimately, if done right, collection letters help you to get paid while leaving the relationships with your customers intact.

What Makes a Collection Letter Effective?

Your relationship with your customer begins with effective communication. Staying honest is key. Communication typically starts by collecting the customer’s information and also providing them with a contract or conditions of sale that outlines your payment terms.

However, it may happen sometimes that customers don’t pay. And here, collection letters are another vital part of communication and a key tool that you can use to recover outstanding accounts. These letters are so so effective because they:

notify customers of outstanding accounts
demand payment from customers
indicate the steps required to get back on track
serve as notifications of the steps you’ll take if they fail to make payment

Heads up: to be effective as a tool in your collection efforts, there’s some information you need to include and mistakes to avoid.

What Information Should You Include in a Collection Letter?

Now that we’ve seen what collection letters are and why they’re effective, let’s look at the key information any effective collection letter should contain:

Company details. You must include your contact details on the collection letter including your address, telephone number, email address, and website if you have one. This is simply to make it easier for the customer to contact you.
Amount owing. You’ll have to include the exact amount owing. Ideally, you should include it in two places in the letter and it should be clearly visible.
Due date. It’s important to always include the date when the balance was due to be paid.
Invoice or account number. By including the account number, you’ll ensure that your customer knows exactly what account you’re referring to, so you can eliminate disputes later on. Including the account number also helps you keep track of the collection letters you’ve sent and follow up on payment. If you have a written contract with your client, also include reference to the contract and the date it was executed.
Call to action. This is one of the most important parts of the collection letter and aims to appeal to your customer to pay the outstanding amount. Here, it’s a good idea to include different methods of payment so that your customer can choose the most convenient one, which, in turn, increases the possibility that they’ll pay.
Thank you. Although it may sound strange to thank the customer, it goes a long way not only to increase the possibility that the customer will pay, but also shows professionalism and that you’re willing to maintain the relationship with the customer.

The Four Types of Collection Letters

The First Collection Letter

You’ll typically only send the first collection letter after you’ve tried to contact the customer by phone or email, and you couldn’t get a hold of them. In some instances, you’ll also send the first collection letter if you’ve gotten hold of the customer, but they failed to make a payment arrangement in respect of the overdue amount.

Keep in mind, though, that you should send the first collection letter no later than 14 days after the due date.

The second Collection Letter

Before you send the second collection letter, you should try to contact the customer again to find out whether they got the first collection letter and if they want to make a payment arrangement. If you can’t reach the customer or you do, but they fail to make an arrangement, it’s time to send the second collection letter.

Although the first and second collection letters convey much the same message, the main difference between the two is that you’ll make mention of the previous collection letter in the second letter.

The third Collection Letter

Once you’ve sent the second collection letter, you’ll once again try to contact the customer by phone. If you can’t get hold of them and they’ve made no attempt to contact you after the initial two letters, you should send the third collection letter.

Like the second collection letter, you’ll refer to the first two letters and the fact that all attempts to recover the outstanding balance from the customer have been unsuccessful. Here, it’s also advisable to send the letter by certified mail as this requires that someone sign for the letter, which gives you proof that it was received.

The fourth Collection Letter

By the time you get to the fourth collection letter, it should be clear that the customer is either unwilling or unable to pay the outstanding amount. As a result, you’ll also use the most assertive language in this letter while still remaining professional.

Like the third collection letter, you’ll state that previous letters have been sent and all attempts to collect the outstanding amount have been unsuccessful. Likewise, you’ll also send this letter by certified mail to ensure that you get proof that it was delivered and received.

Common Mistakes To Avoid

Remember, the ultimate goal with the series of collection letters is to recover any outstanding amounts from a customer while maintaining a good relationship. Although you now have some guidelines as to what information to include and when you should send the letters, there are some things you shouldn’t do.

Considering the above, it’s vital that you don’t:

Use harsh words in the letter and rather keep it professional.
Harass customers for payment. Although, in some cases, customers won’t pay, it’s always best to assume that they will.
Send text messages to customers. It’s always better to use collection letters that are formal and professional, and which provide you with proof that they were delivered and received.
Communicate with customers through social media. As stated above, you want a record of the correspondence that you’ve sent to the customer and the proof that they’ve received it. With social media, this is unfortunately not very easy to keep a clean record.

Download collection letter templates

With our free template, you’ll be able to send one or more collection letters to the customer to get your cash flow back on track.

The Bottom Line

When you want to optimize the cash flow in your business, you must implement the right strategies to ensure that your invoices and outstanding balances get paid on time, every time.

Hopefully, this post helped illustrate what information you should include in a collection letter and when it should be sent.

To find out more about collections, our services, or to download our collection letter template, visit our website or get in touch with us for more details. Monetaria Group is a New York-based B2B collections company that helps both small and medium businesses with their B2B collections.

Tags b2b load tips, collection letters, customer relations

B2B Collections

Managing Credit Before It Becomes Bad Debt: 5 B2B Loan Rules to Live By

Post author By Monetaria Group
Post date July 26, 2021

At the root of any business, the goal is to make a profit. Forget yoga. Cash coming in at the end of the day is crucial to personal wellbeing. What’s stopping you from seeing those positive weeks turn into profitable months is bad credit.

As of 2020, the total US public debt surpassed $20 trillion. That’s a lot of zeros. Which is to say managing credit with customers can be tricky. This goes double if you understand their situation or have seen them hit hard times.

Everyone knows a business that has trouble with past-due bills. The stories of how that debt accrued can be tragic. But remember, B2B credit management isn’t about feelings. It’s a set of rules that can protect you from drowning in defaults.

In the article below, we’ll go over five simple rules that can help you manage customer credit before it turns into bad debt. With our help, you will answer the question that enters most of our clients’ minds: What are the best practices for managing B2B credit?

managing credit: monetaria's 5 rules

Know Your three p's (practices, procedures, & policies)

You need to have these three Ps in hardcopy. Working with clients every day means you know most of this stuff already. Typing it out and circulating it to your employees, however, changes more than you may think.

Your B2B loan practices, procedures, and policies safeguard you from extending credit to customers that may not be worth the effort. It also helps larger teams support one another in faster credit industries, such as merchant cash advance.

Here are some questions your three Ps should answer:

What are the credit limits?
Where are these limits recorded?
How do we define credit terms?
What are our nonpayment actions?

Clearly Define what Creditworthiness Means to You

Look, this isn’t personal or anything, but lots of businesses don’t sit down and think about who they should be giving credit to.

You can have more policies and structures than the IRS. It doesn’t mean anything if your business extends credit to anyone that walks in the door.

Also, we recommend reassessing customers on a routine basis. That way, you can spot the warning signs which can lead to delinquency.

Build an Authorization Chain

Every customer has their own history with your business. We don’t doubt there are some you’re more willing to give an extension when they default. But have you sat down and planned out who approves extensions?

To do that, you must establish a hierarchy. Everyone should know who signs off and who doesn’t. Authorization chains can help solve the following issues:

Credit Limit Increases
Collection Terms and Periods
Payment Freezes

Make Updating Creditor Info Second-Nature

We should all be on the same page by now and agree that having a clear credit limit, delivery term, and collection period is vital for every client. But as time goes on, a customer’s situation might change.

Their business might lose monthly income. Or it could be the opposite — they could be doing better. Either way, you must make it a habit to update their information.

Is starting to seem like a lot to keep track of? Try looking into some credit management software. The hassle and expense of getting the program up and running could be worth it in the long run.

Put a B2B Collections Agency on Speed Dial

With accounts receivable, it pays to have a collections agency you can trust. Once an account turns 60 or 90 days delinquent, you’re better off sending it to the pros. Here are a few reasons why:

Keep it professional: You’re less likely to get emotions involved if you hand delinquencies to the experts.

Recover Assets Faster: Our suite of debt collection tactics means quick recovery.

No Wasted Time: You can focus on clients that pay, and leave the others up to us.

Want Our advice? Read the Beginner’s B2B Debt Recovery Handbook

Defining creditworthiness and keeping customer files updated can keep your credit from turning into bad debt. Just remember that B2B collections aren’t something you master in a weekend. We’ve been in the business for years and we’re still learning.

So if you want more help avoiding bad debt, don’t forget to download our handbook. We’ve packed it with strategies, checklists, and advice that has helped our clients avoid delinquencies.

Get it for free right here.