Collection Agencies And Other 3rd Party Options 6 of 6
By Dean Kaplan+
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.