Sending someone to collections can be an intimidating process, but it’s necessary for recovering debts that have gone unpaid for too long.
Whether you’re a small business owner or an individual who’s owed money, knowing how to send someone to collections is key to securing payment. To help steer you in the right direction, we’ve broken down this process in a few easy-to-follow steps.
1. Establish a Contractual Relationship
In order to send a debt to collections, there must be a contractual relationship between you (the credit grantor) and the consumer or company (debtor). This relationship should be in the form of a written contract or agreement. It’s important to ensure that this agreement is legally binding and has been accepted by the debtor.
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2. Use a Secure Method to Transmit Information
Insure the collection agency you have chosen has provided you with a secure way to transmit the debtor’s information. You don’t want to send financial information or personal information like social security numbers across the internet unsecured. This protects the information of both you and the debtor.
3. Receive a Written Acknowledgment
Once the account is placed with the collection agency, you should receive a written acknowledgement of the placement. Take the number to reconcile the total number and total balance of the report with your records to ensure it’s accurate. This step helps you keep track of the debt and any payments the debtor makes.
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4. Receive Regular Updates
The agency you’ve chosen should provide regular updates on their progress and status of the accounts you’ve placed for collection. The collection agency must keep you informed of any progress, such as when the debtor was contacted or when a payment has been made.
5. Receive Financial Reports
The collection agency should send you itemized statements at a minimum of once a month. This will itemize each payment they have received during that period and clearly reflect the amount of commission they’ve accepted for each payment. It’s essential to keep track of payments and commission to avoid any disputes and ensure transparency.
Sending someone to collections can be a difficult process, but it’s important to know how to do it properly. By following the above steps, you can ensure that you’re taking the necessary precautions to protect yourself and the debtor during the collection process. The process of sending someone to collections requires careful attention to detail and regular monitoring, but it’s an important process for recovering debts that have gone unpaid for too long.
If you need help sending someone to collections, reach out to us. We’d love to help.