A debt collection agency is a private company that collects overdue debts, usually unpaid invoices, from customers on behalf of various companies. It normally works on a contingency basis.

Companies commission debt collection agencies so that they can professionally take care of the debt collection process and receivables management. The primary aim here is to reach an agreement between customers and companies, i.e. debtors and creditors. By outsourcing in this way, companies can save valuable working time and personnel costs, with the aim of still getting their money quickly and preventing payment defaults.

If a company or the debt collection agency commissioned by it has to initiate debt collection proceedings against a customer with outstanding receivables, this naturally involves effort and therefore also costs.

In this context, the question always arises as to who has to bear the collection costs incurred in the context of a debt collection order.

In principle, collection costs are to be borne by the debtor. The composition of the collection costs is clearly regulated. The following are therefore legally permissible:

• Invoice amount due
• Default interest of a maximum of 5%, unless otherwise stipulated in the creditor's General Terms and Conditions (GTC).

Other collection costs such as:

• Costs of opening the file
• Various processing fees
• Reminder fees
• Circulation compensation
• Costs for legal advice, address research and credit checks

the debtor is not obliged to do so.

Monetary claims that are due are collected through debt collection, i.e. commercial debt collection. The prerequisite for debt collection proceedings is the non-payment of a claim, such as an invoice, within the payment period by the debtor/customer. The key point here is that a creditor/company is entitled to payment for the services it has provided.

Normally, the customer first receives a payment reminder if they fail to meet their payment obligation. However, it should be noted here that such reminders are not an obligation on the part of the company, but rather a gesture of goodwill towards the customer. This gives the customer another opportunity to settle the outstanding financial claims. If they do not meet their obligations, further reminders are normally sent. This is also a concession on the part of the creditor and is by no means a legal requirement. The debtor is already in default of payment after the first reminder or expired payment deadline, which entitles a creditor to initiate debt collection proceedings. Consequently, debt collection without a reminder is certainly possible.

This is usually passed on to a third party, i.e. a service provider such as a specialist lawyer or debt collection agency. They usually check the individual case first and send another written reminder to the non-paying customer, who now has the opportunity to defend themselves against an unjustified request for payment with appropriate objections or to pay the outstanding amount. If the customer fails to do so, legal action can be taken, including enforcement or seizure. If the debtor is currently in financial difficulties or is even unable to pay, an installment payment or so-called title monitoring can be agreed.

• Employees in the accounting or finance departments of a company, authority or institution who wish to train or further their education in debt collection
• Interested and ambitious people who are looking for a quick and easy career start in debt collection
• Employees who would like to have proof of their skills in the field of debt collection in order to gain attractiveness on the job market and keep up with the competition

In a debt collection course or seminar, central topics relating to debtor management and receivables management are addressed. Depending on the type of course or provider, different topics are addressed and dealt with in depth. The debt collection training program imparts knowledge in the following areas, among others:

• Basics and in-depth knowledge of debt collection
• Debt collection procedure, deadlines, fees and costs
• Legal action: procedure and procedure for civil proceedings and other legal options
• Legal proposal: amicable and legal settlement
• Garnishment and certificates of loss: knowledge of the different types, meaning, procedure and their consequences
• Communication: Successful communication between debtors and creditors
• Reminders of payment obligations: Friendly, prompt, targeted and effective communication
• Correct and legally binding formulations for orders, purchase orders, invoices, confirmations and documents
• Conflict management: Procedure in the event of non-compliance with payment obligations and ways to find an out-of-court solution or legal action
• Insight into business law, bookkeeping and accounting
• Debt collection and bankruptcy law: knowledge about dunning and forced collection

In simple terms, the term debt collection means that financial receivables that are justifiably due are collected or pursued. It originates from the banking sector and is part of accounts receivable and receivables management, which also includes accounting and dunning. Receivables can be, for example, unpaid products, goods or services. Debt collection, i.e. the collection of outstanding invoices that have not been paid on time, can be carried out by the creditor itself or represented by a third party, such as a law firm or debt collection agency.

Regardless of whether outstanding receivables are to be collected in the company's own name or in the name of a third party, the aim of debt collection is to ensure that debtors, i.e. debtors or customers, pay for the services actually used by a company.