A Comprehensive Outlook of a Debt Collection Dictionary

The financial industry, as a whole, is quite complex. Especially when it comes to debt collections, things can get complicated in a matter of moments!
However, if you are a business owner, you have to have some idea about finance and debt collection, without which you can’t survive in this competitive market. And to do that, you must familiarize yourself with some of the industry-specific lingos, that can help you understand the process and protect your rights!
Let’s explore the blog till the end to learn about some basic yet crucial terminologies that a professional credit collection agency uses to communicate with clients and debtors alike.
Glossary of Debt Collection Terms That You Should Know
Debtor: A debtor is referred to as an individual, or a company, that owes a debt to someone else for purchasing the latter’s products or services.
Creditor: A creditor is referred to the individual, or party to whom you owe money after you’ve offered them your products, or services.
Debt Collection: Debt collection refers to a process where creditors pursue debts that are owed to them by individuals, as well as by businesses alike. A company specializing in commercial debt collection services is known as a credit services collection agency.
Accounts Receivable (A/R): The money that individuals or businesses owe to another entity (individual or business) for the goods and services offered by the latter, and has still not been paid yet.
Note: Managing A/R can get challenging, especially if you are not aware of credit and collection policies!
Accounts Payable (A/P): The money that an individual, or a business, owes to the creditor party in exchange for their products, or services.
Bad Debt: Bad debt is a very common phrase that you might come across among debit and credit collection terms. It refers to all those debts that are owed to an entity, but have not been paid off yet. Bad debt is also considered to be ‘uncollectible’ for an array of reasons.
Aging Report: The Aging report refers to a list of Accounts Receivables that are categorically listed by the total number of days until the due date of the payment or the total number of days that have passed since the due date of the payment.
Credit Bureau: A Credit Bureau is an institution that specializes in offering credit scores depending on an individual or business’s personal credit history.
Contingency Fee: A fee structure that most debt recovery services in Houston adhere to, in exchange for recovering a bad debt for another entity. A contingency fee structure means an individual pays the agency only when the latter has been successful in their quest!
Sure, there are more terminologies in the debt recovery industry. However, listed above are some of the most common ones that can help you understand what a credit collection services company, like us at Nelson Cooper & Ortiz, LLC, tries to say!
Want to avail our services? Drop a mail at info@prelitigation.com to get in touch today!