Commercial Debt Recovery- Target Clients and Fee Structure
Commercial debt recovery is when an outside company takes over the responsibility of trying to collect the debt from a business debtor. This is known as a third-party collection practice. The third-party collection agency was not a part of the original contract. The third-party collection agency is hired because the original company may not have staff in place or find it more cost-effective to hire a company that is trained to successfully collect money from a business debtor.
Commercial debt recovery is one company trying to collect a debt from another company. The original company of the agreed services offered did not follow the contracted terms and conditions of the loan or services rendered. They will initially have late fees to pay when past due. Then, when debt gets longer over 30 days a third party commercial debt recovery company may take over in an attempt to collect the debt on behalf of the original company that started the contract.
Commercial debt recovery companies have a marketing strategy to solicit the services of major companies that have clients with thousands and millions of debts. Most of the debts are unsecured debts. This means the debts don't have collateral where the clients would lose ownership of a home or a business building. Some examples of the type of debt trying to be collected are purchase loans, unpaid bills, and medical past-due debts. Commercial Debt Recovery companies typically make money the more they collect. They will usually get paid a percentage of the money collected by the original first-party company that offered the services to the debtor.
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