5 Mistakes Companies Make When Collecting Commercial Debt

 Posted on September 13,2024 in Commercial Litigation

Commercial debt collection is a necessary task for many businesses. Companies often conduct transactions on credit terms, providing goods or services for payment at a later date. When that date comes, the creditor is entitled to collect the money it is owed. However, debt collection can be a challenging process and can backfire on the creditor if it fails to take certain steps. Mistakes made while trying to collect commercial debt may result in lost revenue and can damage business relationships. The best way to avoid such pitfalls is to consult an Illinois commercial debt collection attorney who can guide the process.

In this article, we will discuss five mistakes commercial creditors make when collecting debt.

Maintaining Poor Documentation

A common error made by companies who try to recover commercial debts is keeping inadequate documentation. Record-keeping is an essential part of the debt collection process and can be the determining factor in its success. Creditors should keep records of every phone call, email, and communication attempt, in addition to invoices. Failure to do so may sabotage the creditor’s chances of winning a legal dispute down the line.

Waiting Too Long

Waiting too long to collect the debt can reduce a creditor’s likelihood of recovering it. Circumstances can change significantly the more time that passes. For example:

• The debtor’s financial situation may deteriorate and the company may no longer be able to meet its financial obligation.
• The debtor may file for bankruptcy.
• The debtor may disappear.

Delaying action can result in revenue loss, which is why it is recommended to begin the debt collection process as soon as the creditor is legally entitled to do so.

Using Threats or Aggression

Another mistake some creditors make is being aggressive or threatening the commercial debtor. The Fair Debt Collection Practices Act (FDCPA) prohibits harassment or aggressive behavior by creditors, such as:

• Making repeated phone calls to annoy or harass the debtor
• Using profanities or obscene language to intimidate
• Pretending to be affiliated with law enforcement
• Threatening illegal action

Failing to Consult an Attorney

Commercial debt collectors who fail to retain proper legal counsel risk being found in non-compliance with state and federal regulations. The Fair Debt Collection Practices Act (FDCPA), which is enforced by the Federal Trade Commission (FTC), is one such law. Illinois has its own rules about debt collection, which can be found in the Illinois Collection Agency Act (ICAA), the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFDBPA), and Supreme Court Rule 208.2.

Contact a Cook County, IL Commercial Debt Collection Attorney

Debt collection is an essential part of a company’s financial management. However, it poses certain challenges that are best overcome with the help of a Chicago, IL commercial debt collection lawyer. Teller, Levit & Silvertrust, P.C. has been serving U.S. and international clients for over 100 years and our experienced attorneys are ready to guide you through the debt collection process. Schedule a consultation by calling 312-922-3030 today.