B2B relationships and collections are exceptionally challenging. But, in a B2C environment, there could be thousands of consumers working with or purchasing from the business. Commercial relationships go much deeper than that. The business itself works with fewer customers; the sales cycle is much longer and results in more significant invoice amounts.
In order to examine the difference in the collection process, here’s how commercial debt collection differs between B2B and B2C in general.
In a typical consumer transaction, the decision-making process is substantially shorter. It’s more about considering selling the wares at a market or when you eat out at a restaurant. However, with a business to a business decision, the fulfilment of the needs is more complicated, and therefore, the relationship must be established.
The longer process includes:
- Evaluating the needs
- Seeking a match
- Considering the services or products
- Researching the business
- Building trust only to make a decision
The business-to-consumer transaction includes one stakeholder, i.e., the consumer. These are basically consumers who decide, the consumer who is consuming the goods or services. The consumer is responsible for the payment of the goods or services.
Due to the nature of the decision-making process, there’s no more stake here; many people may be involved in the relationship. Now, these decision-makers could range from management to ownership or both.
Consumer relationships are of utmost importance. Here, exceptional cases may include ongoing services, including utilities, banking, or healthcare. The relationship is transnational and may not be dependent on contractual terms. The business works with thousands of consumers.
Collecting B2B debt needs to be handled differently. While consumer collections are protected and dictated under the Fair Debt Collection Practices Act (FDCPA), there’s no legislation for B2B collections.
Some of the best practices here include:
- A demand letter
The initial communication lets the debtor know that the business is attempting to collect a past due amount. Next, the letter informs the company of the amount owed, allowing them to respond or deny the debt. This also allows you to pay in full.
- Attempting to contact
FDCPA requirements don’t apply to a third party debt collection agency. Businesses are now allowed to run little investigative works in order to connect with their debtors. There are certain tactics that are forbidden, i.e., skip tracing or calling many times per day. A commercial debt collection agency will use the right approach for seamless collection.
- Hire collection firm
A commercial contract has more at stake. They run longer sales processes, long-term relationships, and higher balances when you hire a third party collection agency; it’s another way to collect without damaging the relationship.
- Collection made easy
Attempting to collect can have more drastic efforts than commercial collections. Your relationship is at stake, which can take longer to establish. In the retail pipeline, there are fewer leads too. However, if the business is based on partnership and is in contract, and an invoice is unpaid, companies still have the option to collect.
While volumes are lower and the balances are more significant, commercial debt collection can succeed when recovering debt. It helps you save businesses time and money they’d spend.
Debt collection is exceptionally challenging. A professional collection firm can take the right approach for successful debt collection. Besides, recognizing your specific need helps you with all your collection efforts. If you’re planning to work on all those unpaid debts, it’s best to partner with experts. Vital Solutions is a leading debt collection agency. We guarantee a healthy recovery rate for all your commercial collections. Get in touch with our experts to learn more.