In tough economic times when the market is struggling, the financial burden results in more accounts being transferred to commercial collection agencies to recover monies owed. Commercial collections more often deal with larger balances than personal debt collections and thus commercial companies owing have more at stake in regards to their credit standing for future business if they fail to meet their responsibilities. And though restrictions aren’t as tight for commercial collectors, it is important to remain professional at all times.

In principle, commercial debtors should appear as they do in their day to day business operations, with the courtesy and professionalism that earns them clients and retains new ones, but they can be more demeaning in regards to company finances than their personal collection counterparts.

One advantage of operating a commercial collection agency over a personal agency is that many businesses delay collection accounts due to their priority level –day to day operations that produce revenue for the company is first and foremost-, and not due to a lack of the ability to pay it off. By advising the accounts payable representative of the importance of maintaining an impeccable credit rating for the company, the faster the commercial collector can convince the accounts payable representative to address and resolve the issue. Maintaining a pristine credit rating, the company can better assure that potential clients will be more confident in doing business with them.

Commercial collectors have a responsibility to act professional, but firm in their demand for repayment on a delinquent account. Experience in collections teaches one to assume that any contact with the debtor will be the only contact. Resolving accounts in arrears on the initial contact, on as many accounts as possible, is the primary goal of any collector. While client collectors get paid a salary no matter how much debt is recovered, the third party commercial collection agencies are often only paid when they collect.

In commercial collections, the client that refers an account to a third party agency has no intention of losing existing business and sometimes one collection notice is enough to urge the debtor to resolving the account. Unfortunately, not all commercial companies are so quick to pay off accounts. Some company policies dictate that they hold onto their payables until strict demands are made directly from commercial collectors or from correspondence.

Do you run a business? Do you sometimes have trouble getting other businesses to pay you or pay you on time? Is too much of your day spent trying to collect payment on overdue bills? If you answered yes to these questions, you might want to consider using a commercial collections agency to get more of your money paid faster.

Such an agency is experienced in commercial collections. By using one, you can devote more of your time to concentrating on the day-to-day tasks of running your business, not trying to collect money on past due bills. You can reduce your bad debt.

Make certain you choose the right commercial collections agency, however. Not all commercial collectors have the same amount of experience. Make certain you choose the right agency. Find out if it has experience in the type of work it will do for you, if it will be able to collect the amount of money you are seeking, and if it can give references.

Do you have confidence the commercial collections agency can deal professionally with your customers? If someone from the agency would have one bad conversation with them, it could ruin your reputation and even involve legal issues.

Does the commercial collections agency you are considering using know the law on such issues? Does the agency have enough resources to use skip tracing, one of the methods used, to find those who are avoiding you? There are local laws to consider, and does the company know them well enough to avoid breaking any rules? If you would hire a company that would break a law, that could be worse than having the debt.

How many methods of debt collection does the company you are considering use? Will it use only the methods you approve?

A commercial collections agency can help a large or a small business. Not all businesses pay their debt on time. Some do not pay at all. If you get tired of filling your balance sheets with such terms as andquot, bad debt, or other receivables, you might one to find a reliable one. You will find your debts will be paid much sooner. You will have more revenue, and your salespeople will receive their full commissions, not spending some of their time working as debt collectors. You will also be to retain current customers and seek additional ones.

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.

Research shows that country’s economic growth has slowed to its weakest pace since 2001, the last time the nation experienced a recession. In an article published in the Economic Times, April 2007- 2008 saw a 49% increase in nationwide business bankruptcy filings, by far the year’s biggest gain. Even worse, jobs have been lost for the fourth month in a row, with a total of 260,000 having been cut this year. And all of this occurs even as a federal law makes it harder for people to erase debt!

While the entire nation has been targeted, South Florida has been hit particularly hard. An article published in the Sun-Sentinel found that from January- April, the U.S. Bankruptcy Court’s Southern District of Florida, which represents nine counties, received 5,579 total business and personal bankruptcy petitions. The same period in 2007 saw 3,227 petitions; a whopping 73% year-to-year increase! The court found that there were 73% more business and personal bankruptcies filed in April 2008 compared with a year ago.

In March, 15 Palm Beach County businesses, 25 Broward County businesses, and 32 Miami-Dade County businesses filed for bankruptcy. Andrew Cagnetta, owner of Fort Lauderdale’s Transworld Business Brokers, says that South Florida’s economic crisis is due to the “triple whammy effect: gas prices, banks being uncooperative and the real estate market not fueling sales.”

Now, many companies are permanently closing and filing for bankruptcy protection. This includes those with multiple South Florida locations, such as Linens ‘N Thing and American Home Mortgage. A large number of South Florida-based companies, including two builders, Levitt and Sons and Tousa Inc., have also sought bankruptcy protection. One company’s problems can affect others; a builders’ bankruptcy causes contractors, door/window companies, and flooring businesses to declare bankruptcy, as well. And family-owned businesses aren’t safe, as many suffer when their tenants leave or can’t pay the rent.

It’s unlikely we’ll see much good news in the near term as more bankruptcies and foreclosures are certainly to be expected in a recessionary period. “The biggest question is how long the cycle is going to last,” says Mike Jones, president of Palm Beach County’s Economic Council. “This is really serious. It’s not going to be a short cycle. It’s not a quick recovery,” said Paul Singerman, the bankruptcy lawyer for Levitt and Sons of Fort Lauderdale and co-counsel for Hollywood-based Tousa. He says that for every client filing for bankruptcy, 10 more avoid bankruptcy by doing “workouts”; this includes selling businesses, refinancing debt, or taking on new partners with money.

In the current turbulent, tight credit economy, more and more businesses are finding it necessary to hire a collections agency to manage the collection of delinquent A/R accounts and other business debts.   Business owners want to find a way to accelerate debt collections while maintaining as many valuable customer relationships as p possible, and preventing any reputational damage that might incur from an overtly aggressive collections policy.  Stories of encounters with overzealous collections agents - sometimes seen as rogue bounty hunters - are common enough, as are the related stories of the efforts of debtors fighting back against collectors, sometimes using the internet to counterpunch by airing grievances and even smearing the reputation of former business parnters.  Once a decision has been made to contract a business collection agency, the most critical question guiding the search for a collections vendor becomes “how do I know if this agency is reputable or not”?

You can rest assured that the agents and other employees of Johnson, Morgan & White possess a thorough knowledge of fluctuating federal, state, and local regulations. Our agency’s professionalism is further evidenced by our membership in The International Association of Commercial Collectors, Inc. (IACC). Established to regulate the general welfare of the commercial collection profession, the IACC espouses values ensuring: Education, Leadership, Mutual Support and Fiscal Responsibility.

As a Certified Agency, Johnson, Morgan & White met the IACC’s rigorous membership standards. Prospective agencies must be well-established with experienced owners and principals. A minimum of a $10,000 statutory or blanket client bond must be carried, as well. And, agencies must maintain a separate trust account for all client money.

Prior to being granted membership, prospective clients’ references are verified, to ensure that their professionalism and character aligns with the IACC code of professional ethics. Once membership is granted, the IACC’s high level of professional standards must be maintained. Members must also continually strive for even greater excellence in their business operation.

The IACC provides products, services and growth opportunities to member collection agency companies, attorneys and credit granting professionals. Comprised of more than 240 collection specialists and 160 commercial attorneys, this international trade association is the world’s largest organization of commercial collection specialists.

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.

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