Small firms often face challenges when corporate clients fail to make payments on time. In such situations, having a solid strategy in place is crucial to recover company funds and protect the firm’s financial health. This article explores a three-phase Recovery System designed to help small firms navigate non-payment issues from corporate clients and take appropriate actions to mitigate risks and recover funds effectively.
Key Takeaways
- Implement a structured Recovery System with defined phases to address non-payment issues from corporate clients.
- Utilize skip-tracing and investigation techniques to obtain accurate debtor information for effective communication and resolution.
- Consider legal action as a last resort after thorough evaluation of the case and debtor’s assets.
- Understand the costs and implications of litigation, including upfront legal fees and potential outcomes.
- Negotiate competitive collection rates based on the number and age of claims submitted to maximize recovery potential.
Recovery System for Company Funds
Phase One
Upon initiating Phase One, swift action is taken to signal the urgency of the situation to the debtor. Within 24 hours of account placement, a multi-channel approach is deployed:
- A series of four letters is dispatched via US Mail.
- Comprehensive skip-tracing and investigation are conducted to secure optimal financial and contact data.
- Persistent contact attempts are made through phone, email, text, and fax.
The goal is to establish communication and negotiate a resolution swiftly. Daily contact efforts persist for 30 to 60 days, after which, if unresolved, the case escalates to Phase Two.
This phase is critical in setting the tone for the recovery process, emphasizing the firm’s commitment to reclaiming the owed funds. The collector’s diligence during this period is paramount to increasing the chances of a favorable outcome without further legal escalation.
Phase Two
Upon escalation to Phase Two, the case is transferred to a local attorney within our network. The attorney’s immediate action includes drafting a series of demand letters to the debtor, leveraging the weight of legal letterhead to prompt payment. Concurrently, the attorney’s team initiates persistent phone contact, aiming to negotiate a resolution.
If these intensified efforts fail to yield results, a detailed report is prepared, outlining the challenges encountered and suggesting actionable steps for Phase Three.
The following table summarizes the attorney’s actions during Phase Two:
| Action | Description |
|---|---|
| Demand Letters | Series of letters sent to debtor demanding payment. |
| Phone Contact | Persistent attempts to negotiate a resolution. |
| Case Report | Preparation of a detailed report on the case status. |
Should the debtor remain unresponsive, the firm is poised to advise on the viability of litigation or alternative collection activities. The decision to proceed rests with the client, ensuring transparency and control over the recovery process.
Phase Three
Upon reaching Phase Three, the path forward becomes clear. If the investigation suggests low recovery prospects, we advise case closure, incurring no cost to you. Conversely, choosing litigation necessitates a decision on your part.
Should you opt out, withdrawing the claim is cost-free, or you may continue standard collection efforts. If litigation is pursued, upfront legal fees, typically $600-$700, are required. These cover court costs and filing fees, with our affiliated attorney initiating the lawsuit for all owed monies, including filing costs. Failure to collect post-litigation results in case closure, again at no cost to you.
Our fee structure is competitive and tailored to the volume of claims. The rates vary based on the age of the account, the amount, and whether an attorney is involved. Below is a summary of our rates:
| Claims Submitted | Accounts < 1 Year | Accounts > 1 Year | Accounts < $1000 | Attorney Involved |
|---|---|---|---|---|
| 1-9 | 30% | 40% | 50% | 50% |
| 10+ | 27% | 35% | 40% | 50% |
Remember, our goal is to maximize your recovery while minimizing your expenses. The decision at this juncture is crucial and should be made with careful consideration of the potential outcomes and costs.
Frequently Asked Questions
What is the Recovery System for Company Funds?
The Recovery System for Company Funds consists of three phases. Phase One involves sending letters to debtors, skip-tracing, and attempting to contact debtors for resolution. Phase Two includes forwarding the case to an affiliated attorney for further action. Phase Three includes recommendations for closure or litigation.
What happens if the possibility of recovery is not likely in Phase Three?
If recovery is not likely, the case may be recommended for closure, and there will be no fees owed to the firm or affiliated attorney. Alternatively, litigation may be recommended, and the client can choose to proceed with legal action or withdraw the claim.
What are the upfront legal costs if litigation is recommended in Phase Three?
If litigation is recommended, the client will be required to pay upfront legal costs such as court fees, filing fees, etc. The fees typically range from $600.00 to $700.00, depending on the debtor’s jurisdiction.
What are the collection rates for DCI based on the number of claims submitted?
DCI provides competitive collection rates based on the number of claims submitted. Rates vary for different scenarios, such as the age of the accounts, the amount collected, and accounts placed with an attorney.
What actions are taken in Phase One of the Recovery System?
Phase One involves sending letters to debtors, skip-tracing, investigating debtors’ financial and contact information, and attempting to resolve the matter through various communication methods like phone calls, emails, and faxes.
What happens if Phase Two actions fail to reach a conclusion with the debtor?
If Phase Two actions fail to resolve the account, the firm will provide a letter explaining the issues and recommendations for the next and final step in the recovery process.
