INTELLIGENT BUSINESS SOLUTION
Often overlooked facts: your bad debts lose value over time exponentially, hence, the further we move from the payment deadline, as indicated on the invoice, on the contract or agreed to between the parties, the less likely it is that you will be paid.
Obviously, other key factors, such as your debtor’s ability to pay, for example, will play a key role in establishing our ARM Probability Index (API). Companies who benefit most from our business solution are those who entrust their files to us quickly.
ARM Collection Agency prides itself on offering a turnkey solution to its clients so that they can free themselves from the management of their bad debts and maximize their recovery. As soon as an account is assigned to the agency, the agency provides full support to the debtor, constant communication with credit bureaus and demonstrates exemplary compliance with the applicable legal framework. Whether an amount is recovered or not, the quality of service offered by ARM Collection Agency remains the same.
Several factors can influence the course of a collection file. The following diagram is a simplified representation to help you better understand. As illustrated, our approaches can be very straightforward, leading to a quick outcome within the first few months of a file being assigned, or it can be very complex, if our initial attempts to establish communication are unsuccessful.
THE USUAL COURSE OF A COLLECTION FILE
Assignment of a File
Our service begins as soon as your file is assigned to the agency via our interactive online platform. The information provided is first reviewed to validate its accuracy and ensure compliance with the Act respecting the collection of certain debts. The quality of the information given by the creditor, at the time of assignment, greatly influences the likelihood of recovering the debt.
Using our powerful technology and unique expertise, we survey our extensive database and the credit bureaus to obtain the most up-to-date information about a debtor. We can then update our contact information, assess their financial situation and understand their payment patterns. Each file is assigned an ARM Probability Index (API), which is the index representing our confidence in collecting this debt based on the factors listed above and several others established by our Business Intelligence Analysis Department.
A collection notice is then sent by mail and some debtors will react immediately upon receipt. This is the ideal outcome for both the agency and the creditor. As soon as we have sufficient contact information, which is the case for approximately 95% of our files, the first active collection efforts will begin as soon as the statutory deadline has passed. Otherwise, we initiate a skip tracing process until we obtain new information to begin debt recovery.
First Strategic Phase (Active Collection)
The majority of debtors do not respond to the first collection notice sent, marking the start of our first strategic phase.
Our initial goal is to establish first contact with the debtor in order to present the debt to them and determine their intentions. ARM Collection Agency operates a systemic process in which no means of communication is overlooked in order to contact the debtor, including social networks, emails and known phone numbers.
ARM Collection Agency is both a pioneer and leader in the so-called modern collection industry in Canada and it favours an initial mediating approach. Particularly during this first phase, we strive to create collaborative communication in order to help debtors settle their debts.
This approach is in every way superior to other tactics that over time have tarnished the reputation of the collection industry. Not only do we recover more this way, but we also protect the brand image of our clients and, in turn, their business relationships with their existing and future customers.
This is usually our best opportunity to get a payment or to make a deal, because as mentioned, the likelihood of collecting a debt decreases exponentially over time. When we talk to the debtor, our agents use advanced negotiation skills, learned and honed in regular training, to get them to agree to the obvious solution of paying their debt willingly.
Obviously, if debt collection were easy, no one would need our services! For a number of reasons, whether it is a refusal to pay or a debtor who cannot be reached, this first phase, which generally lasts between 3 and 6 months, often ends with no amount recovered.
ARM Collection Agency contractually requests a minimum one-year assignment period, because, even though time is against us, we are still confident that we can recover some or all of the debt.
Second Strategic Phase (Reactive Collection)
While there are a number of varied reasons why an account is not paid, we can usually group them into three main categories.
The debtor does not want to pay.
- They usually see their position as morally superior; hence, they rely on ethical principles and their internal logic to justify the non-payment.
The debtor cannot pay.
- Not surprisingly, many debtors incur their debts because they simply cannot afford to pay them.
We have depleted all our contact information.
- This represents approximately 25% of our files. We examine external and internal sources weekly for any new information.
Credit Reports at Equifax and TransUnion
We then report the debt to Equifax and TransUnion, and this information negatively affects the debtor’s credit rating. In some cases, this has an immediate effect and we can re-establish a conversation with the debtor. Most of the time, this strategy will work in the medium term—when the debtor wants a loan or tries to get a new credit card. Paying this overdue account then becomes a necessary step.
Emails, Texts and Postal Payment Offers
Even when our initial efforts are unsuccessful, we do not let our debtor forget we exist! We may deploy automated email or texting strategies, assuming we have the necessary information. Our clients, who wish to maximize their returns, will usually pre-authorize a partial settlement of the debt allowing us, during this second phase, to mail settlement offers or to re-establish communication.
Monitoring the Debtor’s Financial Situation
It is common for debtors’ financial situation to improve over time, as they move away from the point at which they first incurred their debts. Whether through the credit bureaus or any other source, ARM Collection Agency monitors these changes very closely to be the first to benefit from them.
Continuation of the Collection Mandate
The Legal Limitation Period: Actions and Strategies for the Creditor
Although we will not specify all the nuances surrounding the legal prescription of a debt, you can refer to this popularized publication by Éducaloi to deepen your understanding. At its simplest, it involves a three-year period given to the creditor to be paid by instituting action in a court of law. Once the debt is time-barred, the creditor is then denied any legal action.
Obtaining a Judgment
Obtaining a judgment in your favour from a court of law helps safeguard your rights to recover your debt. In fact, you will then have an additional ten years to be able to obtain the voluntary or forced execution of the judgment obtained.
Depending on the value of the debt, the creditor must then assess the risks involved and the potential return on this investment in time and money. In addition, although the judgment constitutes an important recovery lever, allowing forced execution by a bailiff in the form of one or more seizures, some creditors will never succeed in being paid.
Recovering a Time-Barred Debt: Our Last Chance for Settlement
It is quite normal to continue with the collection efforts for a time-barred debt, as it is still technically owed. Some clients entrust us exclusively with an inventory of time-barred accounts.
We usually try a final settlement offer for a small percentage of the amount originally owed. This is an alternative to writing-off accounts, which is particularly profitable for creditors with a large number of overdue accounts.
UPS Supply Chain Solutions
Analyste Senior Risques de crédit
Collection-Recovery Senior Analyst