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)
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.
A debt that is unpaid or overdue. This is a legal term that will come up often.
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.
The process, from the moment your invoice goes overdue, of seeking money that you are owed.
The person who is owed money (that’s you). In legal proceedings, they may be referred as the plaintiff.
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:
- Credit inquiries
- Credit cards and loans
- Wage garnishments
The amount of money claimed that is yet to be calculated.
The person who owes money (your client). In legal proceedings, they’re known as the defendant.
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.
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.
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.
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.
The cost of borrowing money or buying goods or services on credit. It is typically calculated as a percentage of the amount due.
An itemized list of goods shipped or work complete, oftentimes specifying the price and the terms of sale.
The initial amount of the debt or the amount that remains unpaid by a consumer. It does not include collection fees and interest.
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.