What is a Debt Recovery Program?

Businesses use debt recovery programs to collect past due money owed to them. The debt recovery process includes two parts: negotiating repayment and actual recovery of the money owed. Negotiation may include working out a payment plan with the company or individual in debt or, if needed, reducing the amount owed. The second step of a debt recovery program, recovery, includes the actual collection of the money owed.

Contact

Contacting the delinquent individual or business is the first step in a debt recovery program. Since initial contact is relatively simple, the business owed the money, rather than a collection agency, may choose to initiate the initial contact. Contact through letters or phone calls regarding the money owed may be all that is necessary to prompt someone to pay. The contact is most often firm and to the point, and spells out the specific amount owed and a deadline for receipt of payment.

Software

Rather than immediately using a debt recovery agency, some businesses opt to use debt recovery software. Debt recovery software ties in with the other company records. It includes information on each client, including contact information, money owed and payment due dates. The debt recovery software can generate letters to debtors and, if desired, can automatically turn customers over to a collection agency. Although debt recovery software can work well for inexperienced business owners, it requires a basic level of technical knowledge and expertise.

Service Selection

Some debt repayment agencies have a reputation for harassment and unethical practices, or on the other extreme, they may have a reputation as pushovers. Though debt recovery services are separate entities from the company owed the money, choosing to work with a reputable debt recovery firm helps protect the reputation of the company owed the money. The ideal debt recovery agency works well with both the business owner and the debtor. Many debt repayment companies have legal teams that ensure all practices are handled legally and ethically.

Court

Considered as a last resort, a delinquent business or individual should only be taken to court when all other options to collect money owed have failed. Due to high court costs, in most cases, if the amount owed is less than $2,000, a business may choose to simply write off the money owed. Debt recovery agencies can work with the attorneys for the company owing the money and may find it beneficial to settle out of court.