Col­lec­tion Agen­cies And Other 3rd Party Options 6 of 6

By Dean Kaplan+


If collection agencies are unsuccessful, arbitration may help settle a delinquent account

If col­lec­tion agen­cies aren't suc­cess­ful in col­lec­tion efforts, arbi­tra­tion may be a time and money-saving alter­na­tive to court

Col­lec­tion agen­cies offer credit depart­ments one option for third party help with accounts receiv­able col­lec­tions. Another option open to credit depart­ments is arbi­tra­tion. Arbi­tra­tion occurs when a dis­pute is pre­sented to an indi­vid­ual impar­tial per­son or to a group of impar­tial peo­ple for a bind­ing final deci­sion. This is the final arti­cle in a six part series about third party options avail­able to credit depart­ments. This arti­cle will focus on arbitration.

Arbi­tra­tors can be busi­ness peo­ple who are experts in a spe­cific indus­try or sim­i­larly qual­i­fied attor­neys. The arbi­tra­tors deter­mine the type of dis­putes they are will­ing to hear, the range of dol­lar set­tle­ment they are will­ing to han­dle, and the specifics of how the arbi­tra­tion process will pro­ceed. Sim­i­lar to medi­a­tion, the arbi­tra­tion process is less for­mal than the courts. Because the par­ties in arbi­tra­tion have agreed to abide by the final bind­ing deci­sion, few arbi­trated cases ever make it to court.

Why do cred­i­tors choose bind­ing arbi­tra­tion? Most cred­i­tors and peo­ple in gen­eral do not want to be faced with a law­suit. Law­suits are costly, time con­sum­ing, can be con­tentious, and can cre­ate unflat­ter­ing pub­lic­ity. If appeals are filed, long delays are com­mon, and pay­ment may be dragged out indef­i­nitely. Arbi­tra­tion is usu­ally time­lier, less costly, and the deci­sion is final. Here are some other key points about arbitration:

• Arbi­tra­tions are much faster than going to court. Courts are over­whelmed with crim­i­nal cases and insuf­fi­cient bud­gets. Speedy processes are not a baili­wick of the court sys­tems. Appeals can slow things down even more.

• Arbi­tra­tors are experts in the indus­try or sub­ject mat­ter of the dis­putes which they arbi­trate. There­fore, they are bet­ter able to sift through the data, under­stand the salient points of the dis­pute and ren­der fair and sat­is­fac­tory decisions.

• Arbi­tra­tion is con­ducted sim­i­larly to a busi­ness meet­ing. It is more infor­mal than a court­room, with par­ties to the dis­pute telling the arbi­tra­tors their sides of the story.

• Arbi­tra­tion is totally pri­vate and con­fi­den­tial. No news arti­cles will be writ­ten about the proceedings.

• Because the arbi­tra­tion process is so much faster than going to court, a lot of money can be saved. Arbi­tra­tion elim­i­nates the need for many of the court fil­ings thereby sav­ing legal fees asso­ci­ated with draw­ing up papers and fil­ing motions.

• Bind­ing Arbi­tra­tion deci­sions are final. The deci­sions are legally enforce­able. The court sys­tem upholds the arbitrator’s deci­sion and does not ques­tion the result as it relates to the law.

For­mal arbi­tra­tion is not a func­tion of col­lec­tion agen­cies. Col­lec­tion agen­cies are experts in accounts receiv­able col­lec­tions. They work directly with the debtor and attempt to col­lect the entire amount owed. They go into every debt col­lec­tion attempt with the expec­ta­tion that they will col­lect all the monies owed. Because of their exper­tise and mind­set, they have a very good debt col­lec­tion suc­cess rate. There are sev­eral third party debt col­lec­tion options avail­able to credit depart­ments. Each accounts receiv­able col­lec­tion has its own set of chal­lenges. Which option will be opti­mal will vary from one case to the next. A job of the credit depart­ment is to be able to deter­mine which option will get the desired result at the low­est cost. In this case, the cost can be defined as time as well as dollars.

This con­cludes this six part series of arti­cles about third party col­lec­tion options avail­able to credit depart­ments. Click here if you missed pre­vi­ous arti­cles and would like to go back and read them Col­lec­tion Agen­cies And Other 3rd Party Options: In Court.

The Kaplan Group is a bou­tique col­lec­tion agency spe­cial­iz­ing in large (over $10,000) debt col­lec­tions due from busi­nesses. Founded in 1991, the com­pany has a stel­lar rep­u­ta­tion (A+ rat­ing with the Bet­ter Busi­ness Bureau) and is rec­og­nized as one of the lead­ing col­lec­tion agen­cies for results on large and com­plex mat­ters.