Debt collection

What does "collections" mean?

The term "collections" refers to all activities a business undertakes to recover outstanding receivables. Collections becomes necessary when a debtor fails to make a payment that the respective creditor is due. When this happens, a business can commission a collections agency to step in and recover the outstanding amount.

How does the collections process work?

If a customer fails to pay an outstanding invoice despite repeated reminders, the company in question can commission a collections agency to recover the claim in its name. Sometimes companies opt to assign the claim to the collections agency in full.

How does the collections process work for online shops?

When payment defaults happen, owners of online shops turn to service providers who specialize in risk and collections management, who in turn collect the outstanding receivable from the respective debtor. But some shop owners opt to take advantage of additional services, such as credit checks, to prevent payment defaults from the outset.