Voluntary collection

Voluntary debt collection usually starts on the due date

The phase of voluntary collection usually starts from the due date. At this phase, the creditor can send payment reminders to the customer with letters, phone or email for example, or make payment plans with the aim of getting the debt collected.

Voluntary debt collection works quite well, and most of the unpaid, debt-collected invoices are successfully paid through voluntary debt collection.

The steps of voluntary collection

The steps of the voluntary collection process differ depending on whether the customer is an individual or a company.

Voluntary debt collection in consumer debt collection

The steps of the voluntary collection in consumer collection can be roughly divided as follows:

1. Sending payment reminders and payment demands

• The first step is to send payment reminders, in which the creditor requires the customer to pay the debt.
• It is good to note that the payment demand can only be sent by a collection agency that handles debt collection professionally. Payment demand can be sent after the customer has first been reminded of the payment. The payment demand is always in writing.

2. Offering a payment plan

• The second step is to offer a payment plan. If the customer is unable to pay the debt at once, the creditor can offer a plan to manage the debt in installments.
• If the debt has not been able to be collected voluntarily, through voluntary collection, there is an option to continue the collection through legal collection.

Voluntary collection in corporate debt collection

More varied means of collection can be used in corporate debt collection than in consumer debt collection. It is beneficial to strive for a rapid collection by promptly reminding of the receivables.

The steps of the voluntary collection in corporate collection can be roughly divided as follows:

1. Sending payment reminders and payment demands

• The first step is to send payment reminders in which the creditor requires the corporate to pay the debt.
• A payment demand can only be sent by a collection agency that handles debt collection professionally. Payment demand can be sent after the customer has first been reminded of the payment. The payment demand is always in writing.

2. Offering a payment plan

• The second step is to offer a payment plan. The creditor can offer a plan to manage the debt if the company is unable to pay the debt all at once.

3. Public Notice

• The third step is the use of Public Notice. Public Notice is a demand for payment that can only be used against corporate / business clients. It demands the payment of the debt within the given deadline, under the threat that the omission will be reported to the credit information register and further published on the protest list.

What are the methods in the voluntary debt collection?

The goal of the professional debt collection company is to open a dialogue with the customer and try to agree on a payment plan or one-time payment. Customer-friendly and flexible customer service is always in the core of Kredinor’s collection services.

Debt collection companies use different means to achieve their goals during voluntary collection. They can send payment reminders and payment requests in written, have contacts by phone, email or text message. We at Kredinor can offer you a modern and customer-friendly service that also includes an active phone collection.

If necessary, a Public Notice (publicly threatened payment demand) can be used towards corporate customers.

Mere a late payment does not cause a payment default entry

Mere a late payment does not cause a note in the credit information register. A payment default entry can arise in many ways: for example, from a district court’s judgment of debt, collection of distraint or filing a debt settlement application with the district court. In addition, in corporate debt collection, a payment default entry occurs in the time of a protested public notice, corporate restructuring or bankruptcy application.

The creditor can also report a payment default entry to the credit information register if the consumer credit payment is at least 60 days late, the possibility of the payment default entry is mentioned in the credit agreement and the threat of the payment default entry is mentioned in the payment request.

Voluntary debt collection methods should be used – you can get your receivables faster and cheaper

Modern, active and customer-friendly service is at the core of the voluntary collection. Voluntary debt collection works quite well, and most of the unpaid, debt-collected invoices are successfully paid through voluntary debt collection.

Thus, it is worth investing in voluntary collection methods. Compared to the legal collection, voluntary collection helps you to get your receivables faster. The costs of legal collection may also become large.

Voluntary debt collection can help your company to achieve your business goals for example in the following ways:

• By improving the cash flow
• By reducing the credit losses
• By strengthening the company’s reputation.

The law regulates the debt collection

The Debt Collection Act regulates voluntary debt collection in Finland. The purpose of the law is to clarify the management of debt collection and protect the customer’s interest. According to the law, the maximum amounts of collection costs are defined, and the creditor can only exceed these maximum amounts in exceptionally difficult collection cases. The creditor must itemize the collection costs and their bases if they exceed the maximum amounts.

As a whole, voluntary debt collection is a phase where the creditor tries to agree on the payment of the debt with the customer before legal debt collection. The goal is to reach a mutually satisfactory solution to pay off the debt.