Outsourced debt collection
Outsourced debt collection involves a large number of service providers. The use of an external service provider, in addition to lightening the workload for the creditor, very often allows him to preserve his customer relationship. It can be explained very easily that the procedures impose the transfer of the debt to a collection agency after a certain delay.
Credit management companies
These are service companies specialized in credit management that take charge exclusively on behalf of the partner company of all or part of the management of their customer accounts. These service companies do not intervene as amicable collection companies, which should not be confused with them, their modes of intervention and remuneration being quite different.
These companies respond to a need to reduce the costs of managing relaunches and to a search for performance optimization through the contribution of highly specialized resources and high value-added management tools. Their intervention is based on a real specification realized in partnership with the company and before the operational start of their mission. Generally, the company uses these management services on a recurring basis. It is important to preserve its contractual freedom and not to commit to too long a period.
In the last few years, a number of innovative startups have developed in this field, offering tools in SaaS mode that are extremely easy to use and allow for the automation of these reminders. This is the case for example of the company Upflow.
Companies can call upon a debt collection company that simply takes care of the initial collection process, and possibly legal proceedings. The collection company is then called "the agent", the company calling upon it is then called "the principal". In this case, the company remains the creditor. In case of non-payment, and when the amicable or even judicial collection process is unsuccessful, the agent can then provide, as a professional, a certificate of non solvency to the principal, allowing him to recover the VAT from the tax authorities.
The collection companies take care of several types of missions. They relieve the creditor of the management of the collection. These companies manage the relationship with the debtor on behalf of the creditor. The extent of this mission depends on the contract signed between the company and the creditor.
Its missions may consist of :
- Send reminders (by simple and/or registered letter) on behalf of the firm;
- Establish telephone contact with the debtor with the aim of finding settlement solutions;
- Granting timelines;
- Collect the debt in lieu of the creditor.
- To accompany the creditors in the legal steps in collaboration with the bailiffs for the notifications and the lawyers for the oppositions
They carry out their procedures according to the instructions given to them and thus relieve the creditor company of its daily collection management. This outsourcing can be judicious considering the characteristics of the company and a large volume of invoices.
The use of a collection company allows access to the mastery of negotiation techniques, legal procedures and enforcement. The collection will be done through dedicated computer tools, completed by databases allowing a better knowledge of the debtor's situation, as well as a network of selected lawyers and bailiffs.
The client will have better control over the costs incurred, thanks to result-based invoicing and legal fees that can generally be known in advance. The collection companies thus ensure a complete outsourced management of the unpaid debts (which starts with an e-mail and a letter of reminder, a telephone call addressed to the customers).
The conditions of exercise are governed and framed in a strict manner by the decree 96-1112 of December 18, 1996 regulating the activity of persons proceeding to the amicable collection of debts on behalf of third parties. The collection companies must respect certain obligations (art. 2 of the aforementioned decree), in particular
- the subscription of an insurance contract covering the pecuniary consequences of their professional civil liability,
- the opening of a bank account exclusively dedicated to the receipt of funds collected on behalf of creditors,
- a written declaration to the public prosecutor of the district court in whose jurisdiction their activity is based.