- Home
- Bankruptcy and Bankruptcy Code
- Business Entities
- Departmental Operations
- Credit Practices
- Collection Practices
- Legal Remedies
- Accounts Receivable; A/R; Accounts Receivable Administration
- Basic Collection Procedures
- Collection Agencies
- Collection Time Line; Scheduling Collection Follow Ups
- Debt Collection Tips; Collecting from Delinquent Customers
- Consumer vs. Commercial Collections
- Deduction Management; Deduction Write Off; The Deduction Management Process
- Documentary Collection Process, Documents against Payment; Documents Against Acceptance
- Documentary Collections Frequently Asked Questions
- Dunning Notices; Past Due Notices; Friendly Reminders
- Humor in Debt Collections
- Improving Collection Performance
- Monthly Statements; Monthly Customer Statements
- Negotiating With Delinquent Debtors
- Personal Visits; Advantages and Risks; Costs and Benefits
- Debtor Referral to a Collection Agency
- Telephone Collections, Telephone Tips; Collection Tips; Collection Tools
- Transferring Collection Assignments
- Partial Payments
- Skipped Invoices
- Alternative Dispute Resolution Options
- Partial Debt Forgiveness as a Debt Collection Tool
- Payment Plans; Extended Payment Plans
- Myths and Misconceptions about Business to Business Collections
- Understanding the Role of the Accounts Payable Department
- Using a Customer's Uncertainty as a Collection Tool
- When to Place an Account for Collection
- Selecting a Third Party Collection Agency
- Credit Holds
- Account Assignments
- Issuing a Final Demand
- Quality vs. Quantity of Collection Calls
- Confronting Delinquent Debtors
- International Debt Collection
- The Power Balance in Debt Collections
- Ten Truths about Business Collections
- Complete Text of the FDCPA
- Financial Analysis
- Financing Methods
- International Credit
- Laws and Regulations
- Payment Methods
- Performance Measures
- Security Instruments
- Career Management, and Job Change
- Credit Website Tools
- Upcoming Educational Events
- Credit and Collections Tools and Tips
- Tips on Creating Better Emails
- Generating Effective Credit Correspondence
- Exporting
- Accounting
Consumer vs. Commercial Collections
Debt collections fall into two categories:
- Consumer collections, and
- Commercial collections.
Consumer collections involve collection activities between a business and a consumer. Consumer collections are highly regulated. In addition to state laws regulating debt collection, consumer debt collection is also subject to the provisions of the Equal Credit Opportunity Act as well as the Federal Fair Debt Collection Practices Act. The FDCPA is intended to protect consumers against overly aggressive or deceptive practices that might be used by an unscrupulous collector against an inexperienced and unsophisticated consumer.
of collection is commercial collections. Commercial collection deals with debts owed by one business to another. Commercial collection is less regulated because it is assumed that most businesses are sophisticated enough to understand their rights when dealing with a creditor. The techniques used by companies dealing primarily with commercial collections are far different from those used to collect consumer debts. For example, due to the high volume of relatively low dollar amounts associated with consumer debt collection, a written payment reminder or dunning notice is a commonly used and effective collection tool. In commercial collections, the most effective way to request payment is by telephone. Written collection efforts are not expected to have immediate results.
Key point: The laws change if a creditor is dealing with a consumer (rather than a commercial) debt. The collector should have a thorough understanding of the laws governing consumer debt collection before ever picking up a phone.
Edited by Michael C. Dennis. Mr. Dennis is the author of several books credit risk management and can be reached by email at mcdennis13@yahoo.com