What is the process of sending someone to collections

ABCAdda | Updated Feb 28, 2023

What is the process of sending someone to collections? When you lend some amount to an organization/business but don't get the credit you lend to the debtor, and your collection department has done all the possible work to get your money back, your customer overlooked all your approaches. Then it is time you must seek help from a collection agency. 

Collection agencies act as a connection between businesses and customers and collect unpaid debts. Their duties include:

  • Developing payment plans.
  • Identifying debtors' other income sources.
  • Assets and debts.
  • Negotiating with the debtors.
  • Making the possible payment.

Here in this blog, we will discuss the process of sending someone to collections. So, without further delay, let us dive into the topic together.

Define debt collection:

Debt collection is getting payments from individuals or businesses that own money from an organization. An organization that collects money from creditors' accounts is called a debt collection agency and charges a fee for collecting overdue debts.
Debt collectors are classified into three categories: first-party, third-party and debt-selling individuals or agencies.

Before knowing in detail about "what is the process of sending someone to collections," let us look at what to do before sending someone to collections.

What to do before sending someone to collections?

Before sending debt collectors to collect money from unpaid customers, the company must follow the below ten practical steps to get their credit back that include:

Start with a phone call:

If a customer doesn't pay his credit bill, there are many reasons, like family issues, health problems, and job loss. So, gently remind your customer with a typical phone call and inquire about their problems. End the call by mentioning the due date of the bill payment.

Send first overdue notice:

If your customer didn't pay the bill after the phone call, remind them to pay the bill by sending an invoice with "past due" stamped on the invoice. 

Send second overdue notice:

Gently remind your customer of a second overdue notice by writing a short letter with a duplicate invoice attached. Mention that the customer account will not be active if they don't pay the bill in 10-15 days.

Make the first collection phone call:

If a customer overlooks your notices mildly, nudge them with a call and ask the reasons for the non-payment of the bill and also get a commitment from the customer to pay the bill. 

Mail the first collection letter:

The letter should provide a direct intimation to the customer regarding payment in full without delay.

Make a second collection phone call:

Remind the customer that the account is now 30-40 days past due. Be polite yet strict with customers regarding pending payments and solve payment issues, if any.

Mail second collection letter:

This mail should warn the customer of immediate payment and explain the short-term consequences a customer may face if he fails to pay the overdue bill.

Make a third collection phone call:

Explain the seriousness to the customer that his account is past due even after repeated warnings, and the company will take the issue to a collection agency if the payment is not made immediately.

Mail the final collection letter:

The tone of the letter should be stern and demanding and tell th customer that if payment is not made within ten days, the matter is taken to court, which might affect the customer's credit rating.

Approach a collection agency:

A financial institution can take the help of a collection agency if the customer fails to make the payment 90 days past the initial warning. But be sure when approaching an agency as they charge a hefty fee for debt collection. 

What best describes what is the process of sending someone to collections?

When a financial institution has waited 90+ days for a customer to pay their credit, and even then, if a customer overlooked all their approaches, a company might seek help from collection agencies to collect their outstanding debts. 
In return, a collection agency may charge a 20-30% fee. So, before sending someone to collections, be ready to face all the situations.


We hope our article on "what is the process of sending someone to collections" has given the answer you are searching for. This article clearly explained the procedure a company must follow before sending someone to collections. So, here is the end of our article.