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What Ethical Practices Mean for Collection Agencies

by Aaron Nelson on November 11, 2014

ethical practices

As a collections team is pursuing recovery, there is often a lack of education regarding standard legal and ethical practices. Business and financial decision makers need to be aware of the importance of ethical collection practices from the perspective of internal accounts receivable departments, as well as outsourced commercial collection agencies. In this post, we’ll discuss what it really means for commercial collections agencies to be ethical collectors, how you can ensure that any debts owed to your company are collected in an ethical manner; and why it’s important for you to do so.

What Does Ethical Collecting Mean?

We all have our own ideas about what it means to behave ethically, but transferring those ideas to the context of commercial debt collections can get difficult. There is no B2B equivalent to the Fair Debt Collections Practices Act, a single well-known federal act that sets standards for debt collector behavior toward consumers. As a result, creditors and debtors alike often have difficulty understanding what is and isn’t acceptable behavior from commercial collection agencies.

While there is no FDCPA equivalent for commercial collection agencies, this does not mean that there are no standards governing ethical behavior for B2B debt collectors. Business debt collections are governed by various policies set at the state level, and by industry associations like the International Association of Commercial Collectors.

The IACC publishes a code of ethics designed to set standards of behavior for commercial collection agencies in their relationships with debtors, creditors, attorneys, and other debt collectors. Here’s a quick overview of what the IACC considers to be ethical behavior toward commercial debtors:

  • Collectors must avoid using harassment to get results

  • Collectors must avoid misrepresentation or other deceptive practices

  • Collectors must respond to all disputes in a timely and reasonable manner

Why Does Ethical Debt Collection Matter?

Even if we set aside the concepts of morality and basic human decency, there are several practical reasons to choose ethical B2B debt collection. To start with, reputation management is a very important concept when it comes to B2B organizations. Relationships between businesses often develop over a period of many years, meaning that mishandling a single collection could end up undoing years of hard work, and also contribute to the general perception that your company is difficult to work with.

On top of this, there’s the simple fact that you’ll always want to deal fairly with your debtors, because you never know what might happen in the future. Handle your debts prudently and with the assumption that your debtors will become paying customers again one day.

How Can You Ensure Your Debts Are Collected Ethically?

The good news is that the guidelines included in the IACC code of ethics do nothing to stand in the way of getting the debt collection results you’re looking for. The key to ensuring that you get a good mix of ethical collections and debt recovery results is to work with a reputable agency that can demonstrate good standing with an industry association like the IACC.

While there are thousands of debt collection agencies out there, only a small percentage of them are reputable commercial collection agencies that can demonstrate experience and a high level of recovery results working on B2B collections. The B2B debt collection experience and expertise these agencies have is part of the reason they don’t have to resort to unethical tactics just to get results. In order to ensure that your debts are collected ethically, make sure you work with an agency that can demonstrate experience and expertise in commercial debt matters.

Contact us today to learn more about how D&S can yield results for your business without compromising ethical collection practices.
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Lonnie Larson, CEO, D&S Global Solutions