In the world of USA-China tech trade, dealing with unpaid invoices can be a challenging and frustrating experience. However, having a structured recovery system in place can help companies navigate through these difficulties and secure their funds. One such system is the 3-phase recovery system, which provides a strategic approach to recovering company funds from unpaid invoices. Understanding this system is essential for companies engaged in cross-border trade and can greatly impact their financial stability and success.
Key Takeaways
- The 3-phase recovery system provides a structured approach to recovering company funds from unpaid invoices.
- Phase One involves initial attempts to contact the debtor and gather information about the debt.
- Phase Two escalates the recovery process by involving affiliated attorneys and legal actions if necessary.
- Phase Three offers options for closure of the case or proceeding with legal action, with clear guidelines on associated costs.
- DCI provides competitive collection rates tailored to different scenarios, offering flexibility for companies dealing with unpaid invoices.
Understanding the 3-Phase Recovery System
Phase One
The clock starts ticking immediately. Within the first 24 hours of initiating Phase One, a multi-channel approach is deployed to reclaim your funds. Letters are dispatched, and the debtor’s financial and contact information is meticulously traced. The goal is to establish contact and negotiate a resolution swiftly.
- Initial letter sent via US Mail
- Comprehensive skip-tracing and investigation
- Persistent contact attempts through calls, emails, texts, and faxes
The intensity of these efforts is sustained for 30 to 60 days, with daily attempts to reach a settlement. If these efforts do not yield results, the process escalates to Phase Two, involving legal intervention.
The success of Phase One hinges on the persistence and thoroughness of the recovery attempts. It sets the stage for potential legal action and serves as a critical foundation for the entire recovery system.
Phase Two
Upon escalation to Phase Two, the case is transferred to a local attorney within our network. Immediate action is taken to draft and send a series of demand letters to the debtor, now with the added weight of legal letterhead. Concurrently, the attorney’s office begins persistent attempts to contact the debtor through calls, aiming to secure payment.
If these intensified efforts do not yield results, a detailed report is prepared for the client, outlining the challenges encountered and suggesting potential next steps.
The following table summarizes the attorney’s actions during Phase Two:
| Action | Description |
|---|---|
| Letter Drafting | First of several demand letters sent. |
| Phone Contact | Persistent attempts to reach the debtor. |
| Report Preparation | A report on the case status if unresolved. |
Should Phase Two fail to resolve the matter, the client is presented with a choice: either to close the case at no cost or to consider moving to the final phase, Phase Three, which may involve litigation.
Phase Three
At the crossroads of Phase Three, the path forward is clear-cut but requires a critical decision. If the investigation reveals slim chances of recovery, the recommendation is to close the case, with no fees owed. Conversely, if litigation appears viable, you’re faced with a choice.
Opting out means no cost, but pursuing legal action necessitates upfront fees, typically between $600-$700. These cover court costs and filing fees, and should litigation prove unsuccessful, you still owe nothing further.
Litigation is a gamble with potential for high returns. Below is a breakdown of the rates for collection services:
-
For 1-9 claims:
- Accounts under 1 year: 30%
- Accounts over 1 year: 40%
- Accounts under $1000: 50%
- Accounts with an attorney: 50%
-
For 10+ claims:
- Accounts under 1 year: 27%
- Accounts over 1 year: 35%
- Accounts under $1000: 40%
- Accounts with an attorney: 50%
The choice to litigate is a strategic decision that hinges on a thorough assessment of the debtor’s assets and the likelihood of recovery. It’s a calculated risk that could lead to full recovery of unpaid invoices or result in a closed case with no additional costs.
Frequently Asked Questions
What is the 3-Phase Recovery System?
The 3-Phase Recovery System is a method used to recover company funds. It involves three phases, each with specific actions and procedures to recover unpaid invoices.
What happens in Phase One of the Recovery System?
In Phase One, the debtor is contacted via mail, phone calls, emails, text messages, and more. If attempts to resolve the account fail, the case proceeds to Phase Two.
What is the process in Phase Two of the Recovery System?
In Phase Two, the case is forwarded to an affiliated attorney within the debtor’s jurisdiction. The attorney drafts letters demanding payment and attempts to contact the debtor via telephone.
What does Phase Three of the Recovery System entail?
Phase Three involves a recommendation based on the investigation of the debtor’s assets. It includes the options of closing the case or proceeding with legal action, with associated costs and implications.
What are the rates for the 3-Phase Recovery System?
The rates for the 3-Phase Recovery System depend on the number of claims submitted and the age and amount of the accounts. Rates range from 27% to 50% of the amount collected.
What happens if attempts to collect via litigation fail?
If attempts to collect via litigation fail, the case will be closed, and the company or affiliated attorney will not be owed anything.
