What is commercial debt recovery and how is it carried out?
Any company that is owed money nowadays will eventually hire an agency to help recoup some of the money owed. This is called commercial debt recovery and is a thriving business.
With mass unemployment and collapsing world economies due to coronavirus lockdowns, the world of commercial debt recovery is likely to become much bigger in coming years.
What exactly is commercial debt recovery? -- This is the term used when a company that is owed money by debtors attempts to collect that money.
In most cases, the company will hire an agency that specializes in commercial debt recovery. The agency will charge a percentage of the debt recovered as their fee, thus enabling the company owed money to recoup some of it without any cost to themselves.
How is it carried out? -- A typical Commercial Debt Recovery will occur in several phases.
The first phase is usually a letter sent to each debtor. The letter tells them how much money is currently owed along with the interest that has been charged. It also informs them of the new due date for payment and the penalties that will been incurred by them if they do not pay by that date.
The second phase is a follow up letter, followed by several phone calls. Calls will continue to be made until the payment is made or until legal action is filed against the debtor who is refusing to pay.
In many cases, if a company hires a commercial debt recovery agency, they can expect to recoup between 15% and 20% of the money owed to them. This also usually only costs them the percentage of the money recouped that the agency takes as their fee.