An effective B2B process can help a company have substantial working capital and good cash flow at all times. Before understanding what is B2B collection process, let’s take a quick peek at Accounts Receivable Management.

Accounts Receivable Management

Accounts Receivable Management involves payment for services or products sold with the revenue collection spread out over a period of time. Businesses thus take recurring payments spanning over a period of time while the total of the contract may be specified as one big amount.

Best practices for Accounts Receivable Management involve payment terms (payee, where to pay, due date, etc.), consistent invoices, automated provisions for receiving payments and a collection policy among others.

B2B Collection Process

Collecting payment from businesses for services offered or products sold is an essential part of maintaining consistent cashflow and important for the overall success of the company.

Unfortunately, it happens that obligations under contracts go unfulfilled with the client not paying the dues. It is imperative for the company to take the right decisions to procure the due payments.

Before working with a Collections Agency, companies usually try to pursue First Party Collections. If the client has not paid a debt and is overdue on a payment the in-house or first-party collections team can try to collect the debt before a specified period. If it is unable to do so it can escalate the issue and write the debt as a bad debt.

In order to protect the rights of businesses, many attorneys and businesses offer commercial collection services. If a business decides to pursue a third-party collection service it will be able to focus on its everyday tasks while delineating the task of collecting unpaid debts to the Collections Agency.

While there is a myriad of actions that are followed in a B2B procedure a few are listed below that give an insight into the working and operation of a B2B collection process which often involves legal actions as well.

Demand for Payment

While Demand Letters may already have been sent by the company, a Demand Letter by a B2B Collections Attorney is usually taken seriously by the client and often results in voluntary payment by the business. This first communication is rather critical.

The Demand Letter should inform the business that an attorney is involved in the collections process, give the client the chance to deny the debt, offer the opportunity for alternative solutions to resolve the debt.

Investigative Work

While consumer collectors are limited in their approaches to collect debt, commercial collectors are not. Under the Fair Debt Collection Processes Act (FDCPA), many investigative tactics such as skip-tracing can be adopted to find the customer’s location, hidden assets, etc to uncover the loan.

Debt Recovery Litigation

If all attempts to collect the B2B debt are unsuccessful, one may have to file a debt recovery lawsuit against the company. If the company has a B2B collections attorney working for them then the Attorney can go ahead and file the legal claim on the company’s behalf and also represent the company.

If a debtor does not respond to the lawsuit, one can obtain a default judgement against the company. In case the debtor does respond, the validity of the contract and the debt needs to be proved in the court.

Simply obtaining a judgement against the client company doesn’t guarantee the payment of the debt. More often than not the business must deploy crude and forceful techniques to uncover the loan from the client business.

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