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Debt Collection Models and Their Using in Practice

Author(s): Anna Wodyńska

Journal: Contemporary Economics
ISSN 2084-0845

Volume: 1;
Issue: 1;
Start page: 1;
Date: 2007;
Original page

An important element of a companyís credit policy is its attitude to collecting due receivables. A company tries to establish the rules of collecting the said amount within the standards that are applied in a company. Depending on the organizational structure of a company, its scope of activity, common practices and, in particular, the credit policy assumed by a company, enterprises use internal, external or mixed debt collection models. Internal debt collection model assumes conducting debt collection activities within the organizational structure of a creditor company. External debt collection consists of ordering debt collection activities at a specialised company that handles debt service (outsourcing), which is connected with acting on behalf and account of the ordering party, but it also consists of receivables trading. The choice of proper debt collection model is not easy, due to, among others, high costs of the process as well as necessary expertise knowledge in the said scope; and the products offered on the market, although they seem similar, do differ substantially among one another. Regardless of the debt collection model, it shall be remembered that debt collection shall be run in a manner that ensures consolidation of entrepreneurís good name and their market position. The debt collection procedure binding in a company shall serve to work out a cooperation model with clients that are based on buyerís reliability.
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