This year our headlines rife with bad news concerning our economy, the issue of coommercial debt collections will probably become a popular topic among business owners. Corporate, or commercial, debt collection agencies utilize methods enhanced by an exceptionally wide scope of technological advances that they combine with traditional detective work to track down debtors and recover what they owe a company. The aforementioned detective work involves investigative technique and talent, often going so far as to understand the psychology behind a delinquent account in order to make a collection. This has been helped considerably with the advent of the Internet, which makes tactics available such as computer surveillance, electronic research, private database access, electronic interception systems and a host of other commercial collection technologies, while complying with all local, state and federal regulations.

Besides settling business debt, commercial collections works closely with the creditor(s) in uncovering fraud while securing their delinquent receivables and bad debt. A company’s investigative and forensic techniques are especially helpful in exposing debtor deception. With identity theft on the rise, corporate debt collection agencies often have to play a very advanced game of cat-and-mouse to get debtors to pay, even employing skip tracer technologies. That said, it is important for an agency to remain professional and respectful of the law, never forgetting their main objective in locating a debtor or debtors and getting them to make good on their debt while maintaining positive relations between them and clients. To this end, reminder letters can may be designed and distributed on the agency’s company letterhead (or their clients’) in regards to outstanding accounts that can be paid discreetly, without telephone or other communications.

Although the bulk of corporate debt is brought on by fraud, identity theft and various other subterfuges, there are those debtors whose accounts have been placed with a corporate debt collection agency due to miscommunication between suppliers and customers, misunderstandings regarding accounts receivable, and other circumstances. Even so, most debtors typically fit into a specific category or type; this categorization allows corporate collection agencies to utilize the latest in proprietary organizational technologies and investigative tactics to locate debtors on a specific case-by-case basis. Once a debtor is located, a personal file can be compiled on the debtor’s financial condition. This technique often allows the agency to formulate the most effective collection method for a particular debtor, and can provide the client with a means to make future credit decisions that will avoid future run-ins with habitual debt offenders. Clients can also request that reports on account activity be made available to corporate credit bureaus.

After all investigative account management techniques have been exhausted, a corporate collections agency may turn to litigation of the debtor to collect an overdue debt. However, a good corporate debt collection agency’s first order is to collect the debt in their possession using the means they have at their disposal. This is generally achieved by employing a dedicated and knowledgeable staff that is familiar with the latest collection technologies their firm has in their arsenal. Once a team of globally tuned and experienced agents is coupled with the latest technological debt collection approaches and communication techniques, they and their firm’s reputation lies in their combined ability to acquire the debt in their possession in full, and present it to the client upon collection through a secure means of remittance.

Despite a variety of dramatic actions by the federal government, our nation’s economic troubles may be with us for a little while longer. Recent reports show that for April of 2008, an increasing number of businesses in the United States filed for bankruptcy. That month saw 5,000 bankruptcies, the greatest number since 2005, when the latest bankruptcy laws were enacted. The bottom line? It’s not just huge corporations that are considering bankruptcy, but a growing number of small businesses, as well.

Johnson, Morgan & White has had repeated success in elevating our clients position amongst creditors seeking compensation from companies in various phases of bankruptcy filing.
This dismal financial data was compiled by Oklahoma City-based Jupiter eSources. The company’s database, known as Automated Access to Court Electronic Records (AACER), is utilized to track federal court filings for businesses nationwide. These findings show that on average, April 2007 saw 158 daily filings, while April 2008 saw 235 daily filings — a 49% increase in commercial bankruptcies. As for the reasons behind this wave of financial distress, the blame can be placed on three factors: tighter credit, higher commodity prices, and stagnant sales

An End to Out-of-Court Financial Resolutions?

Even some financial experts are shocked to find that the nation’s economic downturn is still with us. “Last year was too early to really see the problem for normal-type firms. The only people having trouble last year were hedge funds and big banks in New York City,” says William Dunkelberg, chief economist at the National Federation of Independent Businesses (NFIB). Unfortunately, many economists believe that even those organizations as yet unaffected may still be at risk in the future. “Recessions always used to clean up the inefficient firms, and that’s what we’re seeing,” says Dunkelberg.

This rise in bankruptcies represents a real change in how businesses solve their financial problems. The last decade saw an increase in out-of-court resolutions. Many home-based and unincorporated businesses have been unable to keep up with tighter consumer credit levels. Small business professionals and sole proprietors alike are using credit cards and home equity lines of credit to make payments. They’re also taking out bank loans, although these are becoming more difficult to obtain. A Federal Reserve survey conducted earlier this year focused on senior loan officers at 56 banks; more than half were found to have raised lending standards for small business borrowers.

The Role of Rising Prices
Inflation plays a large role in the nation’s lingering financial troubles. The NFIB conducted research that shows that from March 2007-2008, business owners’ concern over inflation grew from 4-12%. A large percentage of those businesses filing for bankruptcy represent the housing and home-building industries. “The number of new builders that opened up shop [in markets like Florida] was huge,” says Dunkelberg. “A disproportionate number of these bankruptcies are going to be builders or companies closely tied to the housing market.”

While the nation’s wave of bankruptcies will probably remain for the near-future, what’s surprising may be the reason for these filings. As recently as the beginning of 2008, most companies filed due to business failures. “Now it’s kind of tipped the other way, so that more often than not bad mortgage loans are the driving force,” says Cathy Moran, a Mountain View, California-based bankruptcy attorney.

Johnson, Morgan & White, a Boca Raton, Fla.-based international forensic commercial collections firm, today announced that Jonathan J. Engel has joined the Company as director of legal services.

Engel’s responsibilities include facilitating all interaction between Johnson, Morgan & White and the legal firms the Company retains nationally and internationally.

Before joining Johnson, Morgan & White, Engel was chief operating officer for Miami-based law firm Sprechman & Associates, P.A. He also served as the director of legal services for NCO Financial Systems of New Orleans and Chicago and was president of Jonathan J. Engel & Associates, Inc., a retail and medical collection agency he founded.

“Jonathan brings a wealth of experience to our firm, particularly at a time when economic conditions, more than ever, necessitate timely collections,” said Paul Eisenberg, chief operating officer of Johnson, Morgan & White. “His background in collections and work with law firms is ideal as a liaison between our firm and outside legal counsel we retain in the United States and overseas.”

Engel earned his bachelor’s degree in business administration at State University of New York, Fredonia. Born and raised on Long Island, N.Y., Engel is a Davie, Fla. resident.