New Prospect - Debt Collection Agency

New Prospect - Debt Collection Agency

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Afternoon All,

I wonder if anyone can suggest if there are any unusual accounting aspects for a debt collection business, which I should be aware of?

I'm meeting them next week, and don't want to appear unprepared.

Their income appears from 2 sources:

They receive a % of the debt they recover; but they also charge statutory late interest and charges to the debtor as well.  Their clients are largely limited companies, thus they are looking at the flat rate vat scheme

I am assuming both income streams are treated the same way as turnover, and nothing unusual about the business at all really?

Cheers, mick

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By bernard michael
22nd Apr 2015 14:56

Don't they have to be registered with the Justice Dept ?

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paddle steamer
By DJKL
22nd Apr 2015 15:21

Volume of transactions

Like any entity handling ,in effect ,client money,I imagine  they will likely have  separate bank account ,supported no doubt by client / their debts ledgers, with disbursements and, depending on their relationship with those they act for,  possible fee transfers from client account to firm account.

As such if record keeping not good there may be a fair amount of work reviewing/checking/correcting. To a degree I suspect they are similar to a letting agent/ property management company who ingathers rents on behalf of landlords and remits funds net of outlays/costs to these landlords.

As I know to my cost with property management operations never underestimate the ability of staff to incorrectly record transactions. I do not act for any debt recovery agents, the one we use transfers to us the full recovery and bills us distinctly their fee and outlays ,but not sure if that is the norm across the industry.

 

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