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According to the free financial dictionary, the term collection describes “…the act of receiving payment for goods or services. Collection occurs on the spot in a cash sale, while it may occur some weeks or even months later in a credit sale.”

Accounts receivable is a term used to describe amounts owed to a business or an institution by a client or a customer, i.e. when an online-sale is made on account. Businessdictionary.com also describes accounts receivables as “unsecured promises by customers to pay in the future”. These amounts are crucial to a firm’s liquidity. This means that companies (especially SME’s) need effective solutions and modern collection strategies, in order reduce the risk of late payments and additional administrative and financial burdens. Such strategies often involve external debt collection agencies, that are taking over the collection process in exchange for a fixed fee or a small commission.

Payments that are not made on time are usually referred to as late or past due payments. Such payments occur in both B2B and B2C relationships and can be crucial for both the lending and the borrowing party. The due date of a claim is usually settled in the contract between the creditor and the customer. Creditors have the right to claim interest and engage a collection agency immediately upon delay. The most important ingredient for successful receivables management is having strict rules for the handling of late payments.

A debt is a certain past-due amount owed by a second party (consumer, customer) to a first party (creditor, lender) and is due by a written contract. It represents the failed obligation of a consumer to pay back a monetary sum, before a specific deadline, under an agreement. Debts can be recovered either by a private DCA (Debt Collection Agency) hired by the original creditor or by creditor’s internal financial departments. Collection agencies aim to recover any type of outstanding receivables and bad debts in order to return the amount due to the first party (the creditor) who owns the default. Such default payments occur when a consumer acquires a monetary loan in order to use it for personal needs (purchase of goods, services, etc.) or to finance capital purchases, equipment, etc. (for business corporations). In the first case, the default falls under the name “individual” and in the second is known as business to business or B2B default. A debt occurs as soon as an invoice had become overdue and the payment is late. A late payment is considered as such when the period for returning the amount, specified in the contract, has passed. This is usually between 30 and 60 days from the purchase invoice.

The debt collection process is usually carried out by debt collection agencies using different recovery techniques. It can also be executed in the creditor’s internal departments, yet many companies prefer to use the professional services of a DCA (Debt Collection Agency). It is important, that the agency you hire is able to scale the process to your needs and provide modern solutions, that will allow digital communication to the customers and automated regulation and monitoring of the process to ensure compliance and security.

If the creditor operates with consumers, late payments are almost inevitable. Although lenders often write off such debts, they are also concerned about the forthcoming debt recovery. A debt itself incurs when an individual or a business borrows a certain amount, has unpaid bills or overdue invoices; and refers to owing money, goods or services. There are many methods for debt recovery in a lawful and also moral way without harassing the customer and breaching his rights as an individual consumer.

A collection company is hired to collect outstanding payments, normally operating for a commission percentage/fee of the amount taken from the customer. In some countries, e.g. the GSA region (Germany, Switzerland, Austria), it is possible that a debt collection company will not charge its clients a fee for the pre-legal procedure, and sometimes even the legal actions can be free of charge. Debt recovery agencies are regulated by different federal laws and collection agencies acts, depending on the country they operate in, e.g. FDCPA for USA (Fair Debt Collection Practices Act); CAADCA for Ontario, Canada (Collection Agencies Act and Debt Collectors Act); the Fair Trading Act 1973 for the UK regulating all sides of the collection process- subjects of debt, creditors and collection agencies.

Collection services are provided by specialized agencies to convert accounts receivable. Such services might include both the processing of a payment after services or goods have been delivered and the recovery of debt. Agencies, which focus on recovering bad debt are usually called Debt Collection Agencies or DCA’s. Debt collection services can vary depending on the DCA’s policy. Usually, such agencies offer the full package of recovery services- from tracking and tracing the customer, through the pre-legal process, methods of communication, to court actions, if necessary. Debt collection agencies interact with customers by means of different communication methods and contact them on behalf of the original creditor. The collection services can be paid, partly-free or completely free. Some agencies offer free pre-legal and legal actions; some require payment only for the legal actions. Most of the DCAs will not charge their client unless the amount is collected, i.e. the so-called policy of no collection, no fee; but some recovery agencies can require payment in advance on a monthly or on an annual basis.

eCollect is a Swiss FinTech company, that transforms collection into a technology-driven, far more effective process. We provide not only the technology but the full collection service. This means, that you don’t need to take care of anything but submitting the right data to us, so we can process it and collect your outstanding amounts. To use our software and services, you first need to create and setup an eCollect account. Then you can create customers and submit claims. Learn more about collection companies here.

A RESTful or REST (Representational state transfer) API is an application programming interface that uses HTTP requests to GET, PUT, POST and DELETE data.

We apply REST in order to assure more flexibility and reliability of communication. The main benefits of a REST API are:

• It can easily be ported to different types of platforms
• Different components can be developed independently
• Better visibility, reliability and scalability
• Not depending on programming languages (adapting to whatever language a platform is using)