Glossary of Terms Used in Debt Collection

Subchapter: Glossary of Terms Used in Debt Collection

Understanding the language and terminology used in debt collection is essential for businesses operating in the import-export industry. To help you navigate the complex world of debt collection, we have compiled a comprehensive glossary of terms that are commonly used in this field.

Whether you are a B2B business owner, CFO, CEO, accounts receivable clerk, controller, accountant, bookkeeper, or office manager, this glossary will prove to be an invaluable resource.

1. Debt Collection: The process of pursuing payment of outstanding debts owed by individuals or businesses.
2. Debtor: The person or business entity who owes money to a creditor.
3. Creditor: The person or business entity to whom money is owed.
4. Account Receivable: The amount of money owed to a business by its customers for goods or services provided on credit.
5. Collection Agency: A company that specializes in collecting debts on behalf of creditors.
6. Default: Failure to make timely payments on a debt as agreed upon in the contract.
7. Collections Management: The process of managing and overseeing the collection of outstanding debts.
8. Credit Score: A numerical representation of an individual’s creditworthiness, used by lenders to assess the risk of lending to that individual.
9. Legal Action: The process of pursuing debt collection through the court system, typically involving lawsuits and judgments.
10. Negotiation: The act of discussing and reaching an agreement on a payment plan or settlement amount between the creditor and debtor.
11. Statute of Limitations: The legal timeframe within which a creditor can pursue legal action to collect a debt.
12. Collection Letter: A written communication sent by a creditor or collection agency to a debtor, requesting payment of an outstanding debt.
13. Garnishment: A legal process by which a portion of a debtor’s wages or assets are withheld to satisfy a debt.
14. Liquidation: The process of converting assets into cash to repay outstanding debts.
15. Payment Plan: An agreed-upon schedule and amount of payments to be made by a debtor to settle an outstanding debt.

By familiarizing yourself with these terms, you can effectively communicate and navigate the debt collection process. At Debt Collectors International (DCI), we specialize in providing B2B debt collection agency services to the import-export industry. Our experienced team of professionals understands the unique challenges faced by businesses in this niche and is well-versed in these terms and strategies to maximize profitability. Trust DCI to handle your debt collection needs, ensuring prompt payment and improved cash flow for your business.