Introduction
Debt-buying businesses are facing a difficult situation, as fewer and fewer accounts are being purchased. In this new economic landscape, companies must maximize their return on investment to stay competitive.
The Impact of a Negative Perception of Debt Sales
Debt buying agencies are facing a challenging environment, with a negative perception of debt sales from both regulators and consumers. This perception is seen as exploitative and is causing headwinds for these companies.
A New Opportunity: Nonperforming Commercial Account Sales
One option that is becoming increasingly attractive is nonperforming commercial account sales. Originators, who were set up to handle consumer accounts, may not have the infrastructure or knowledge to sell nonperforming small-balance commercial accounts. But these accounts offer benefits to originators who find a way to sell them, including fewer regulations and a high demand in the market.
Selling Commercial Accounts: Best Practices
To take advantage of this opportunity, originators should follow these best practices:
- Set standards for buyers: Choose buyers with a track record of following FDCPA guidelines and avoid buyers with regulatory issues and complaints in the consumer realm. Commercial-only buyers may be the best option.
- Get organized: Buyers will need to see more than spreadsheet data, so provide them with copies of documentation, original documentation, collection activity, and legal efforts.
- Scrub the debt: Remove bankrupt and deceased debtors from the list and make sure the proper legal procedures have been followed to obtain deficiency judgments in foreclosed real estate.
- Know the market: Consult with brokers, sellers, and buyers to understand current prices for commercial notes and be prepared to adjust your expectations.
Conclusion
The current environment presents an opportunity for originators to increase their revenue by selling commercial debt. By following these best practices, originators can maximize their profits from delinquent accounts. Our company has partnered with originators nationwide to help them buy nonperforming loans at an attractive price point and provide unparalleled customer service. Click here to learn more.