What is a Commercial Collection Agency?
If you are curious about commercial collection agencies, you most likely handle receivables within a business. A B2B collection agency specializes in business to business debt. The Federal Reserve recently cited that business debt for 2016 was $13.4 trillion.
But wait, what is Business to Business debt?
Business to business debt is exactly what it sounds like. In other words, one business owes another business money. Therefore, a collection agency collecting from one business on behalf of another would be considered commercial. This differs from a consumer collection agency, which collects from a consumer on behalf of a business. Service industries, software companies, manufacturers, or any company that does business with other companies can have business to business, or B2B debt. Simply put, if a business owes you money, you need commercial debt collection. If a consumer owes you money, you need consumer debt collections.
How do Business to Business collections work?
Employees or members of an organization are rarely the ones who specialize in this type of collections. On the contrary, a B2B collection agency is a third party specializing in the recovery of B2B debt. Most often, an agency will only be paid if they are able to collect all or some of the debt. Many agencies implement a commission structure on contingency. For instance, the agency would receive a portion of funds collected. That is to say, the agency would only be paid if they collected. Should the company fail to collect, there would be no payment for their services. In addition, their business relationships are often structured as a contractor, or 1099.
Who can collect Commercially?
The Fair Debt Collection Practices Act (FDCPA) protects consumers rights regarding consumer debt. It is also highly regulated. Congress put these into affect to protect consumers from harassing tactics.
But what about commercial collections?
First and foremost, the FDCPA does not regulate commercial collection agencies. This does not mean commercial agencies can do whatever they want. Local and state regulations come into play. Certain states require an agency to be licensed and bonded prior to performing any collection activities. Each state has different requirements to receive a license or become bonded. Some of these applications include payment of fees, financial disclosures, or even background checks on those who own the agency.
Commercial collection companies can apply to the Commercial Collection Agency Association (CCAA). This organization certifies members, and has numerous benefits for its members. The CCAA cannot govern agencies that are not members. However, it provides members with credibility in the collection space.
In conclusion, you must carefully evaluate what type of agency best suits your company. Whether it is a consumer collection agency or a commercial collection agency, make sure you do your research on what will work best for you and your organization.
How Can Amplicon Help?
Amplicon’s team of collectors are trained in business to business debt collections. Our team has years of experience collecting for a multitude of industries. Please reach out to us today to learn how we can assist your business. Contact Us Here, or call 949-508-1095.