Any business owner or manager who has ever made a collections call has done first party collections, whether they realize it or not. First party collections means collecting on your own accounts, so any request for payment by phone, letter or in person qualifies as first party collections.
The name “first party collections” means that the entity collecting (or an affiliate was a party to the original transaction. The debtor is referred to as “second party,” and “third party” means another entity that gets involved in the attempts at collection, like a debt collection agency.
Third party collections are different from first party collections in a few ways. For one thing, there’s a lag in time from when a bill becomes past due to when a third party collector starts collecting, simply due to the exchange of files. Another difference is that third party collectors don’t have a personal relationship with the debtors, so they may not be cognizant of the need to remain on pleasant terms with them in the hopes of getting future business.
First party collections attempts are often seen as friendlier or more understanding than activity from third party collections agencies. Your client may rely on your service or product for his business to run, and if so he will be just as amenable to staying on good terms as you are.
Another advantage first party collections has is one that surprises most people-under first party collections you are not subject to the Fair Debt Collection Practices Act. Whether you’re the original lender or a subsidiary of it (some large companies operate their own collections agencies as subsidiaries for just this reason), you’re not considered a collector by law, which adds some flexibility to your debt collection. However, you must still abide by applicable state and federal laws.
Most companies handle their own collections for a period of ninety days to six months. Ideally, when the 2-3 month mark comes up and collections efforts aren’t working, it’s common practice for companies to turn over these accounts to a third party agency or “sell” the debt to them, which means the agency pays for the right to keep whatever return they get on the debt.
The most successful first party collections are done by dedicated collections professionals. Salespeople, accounting staff and business owners just aren’t as capable at collections because their attentions are scattered and collections is one of the least pleasant tasks they have to do.
First party collections done by a dedicated staff is just a more efficient way of handling it. They can take continuing education on collections techniques and perform more collections tasks such as finding people using private investigation, working out creative payment arrangements or disguising collections as audits. First party collections that are operated like third party collections agencies are the most successful.
If payment arrangment have been made and payments are made on time an consistent can the first party still turn the bill over to a collection? problem is now job loss. an bill to be paind in full once find employment?