Debt collection is an important process in the economic and financial world, where individuals and companies deal with…Debtors For those who have financial debts, the causes of debt vary And its sources Whether it is bank loans, unpaid bills or unfulfilled financial contracts, debt collection carries great importance for individuals and businesses.
As the debtors seek to recover their money fairly in accordance with the agreement and the laws in force in this article,We’ll explore The debt collection process and its importance, in addition to the procedures and strategies used to ensure successful debt collection.
What is a debt collection agency in Saudi Arabia?
Debt collection agencies in Saudi Arabia are considered supporting financing institutions licensed by the Central Bank of Saudi Arabia in accordance with the rules for licensing activities supporting financing activities in the Kingdom of Saudi Arabia, and whose role depends on collecting debts affiliated with financing agencies, as they collect debts from individuals on behalf of public and private financing agencies. The debt collection agency in Saudi Arabia takes a profit from the amount collected, and therefore because the debt collection agency has sufficient experience and ability to collect all types of debts, regardless of their type, whether due, late, or non-existent debts.
Tasks of the debt collection agency
Article 18 of the licensing rules for financing support activities stated that among the tasks of the debt collection agency are the following:
1- Develop internal policies and procedures that follow the rules and suggestions issued by the Central Bank of Saudi Arabia, in addition to other regulations.
2- Create official written policies that are approved by the highest regulatory authority. These documents include the rules of internal organization, leadership, risk management, compliance, task distribution, and human resources.
With regard to information security requirements and financial crimes, Article 19 of the rules for licensing and activities supporting financing activity stipulates that the debt collection agency in Saudi Arabia is mandated with the following:
1- The debt collection agency adheres to what the Central Bank of Saudi Arabia requires regarding information security.
2- The debt collection agency is responsible for adhering to the legal and insurance requirements contained in the Anti-Money Laundering Law and the Anti-Terrorism Crimes and Financing Law and their executive regulations, and their own rules and guidelines, which are determined by the Central Bank in a manner commensurate with the nature of the agency’s activity.And its size And the level of risk it poses, in addition to compliance with the regulations issued by the Central Bank regarding financial crimes.
Procedures of debt collection agencies in Saudi Arabia
The most important operation carried out by the collection agency in Saudi Arabia is the debt collection process, so it must proceed according to specific, systematic, and studied procedures, and these procedures include the following:
- The debt collection agency in Saudi Arabia must possess all information related to debts from the financing agencies for which the debt is being collected.
- Conduct a negotiation session with the debtor. At this stage, the debt collection agency must use negotiation and persuasion skills to repay the debt in a way that is in the interest of the debtor. The primary goal is to offer negotiation and reach a solution and then convince the debtor of the advantages of the solution that has been reached. It is also important to use Communication skills with the debtor, and confidence in handling matters through conveying ideas, information, or written or verbal messages accompanied by facial expressions and body language. It is also considered one of the most important and effective means, which is diplomacy and firmness during the transaction. Through this skill, a person can express himself and defend his point of view. Consider it efficiently while respecting the rights of others. In addition, it is important to take into account the psychological state of the debtor, as it enables him to quickly reach a plan to repay late debts when the client believes that this is in his interest, and he has the ability to balance the risks.
- Arbitration between financing parties and the debtor helps in reaching a solution to the problem without resorting to government agencies.
- If all amicable methods fail to collect the debt, you can file a financial claim with the specialized court, but only after the approval of the debt collection agency first, and after obtaining the judicial ruling, the debtor is obligated to pay and the debts are collected for the benefit of the Saudi financing authorities.
- The judicial ruling that the debtor is responsible for implementing is followed up for the benefit of the financing parties.
- If the debtor flees, immediate measures are taken to recover the debt.
When do companies need to contract with a debt collection agency in Saudi Arabia?
If you purchase something, your purchase invoice contains the payment date. Usually, the payment date is within thirty days from the date of issuance of the purchase invoice. If you do not pay the financial dues during this period, you are considered late in payment, and the company informs you via a reminder to pay the financial dues. You are obligated, and in the event that the customer does not pay the debt, the company sends another reminder in addition to the reminder fee. If the debtor also refuses to pay, the company in this case seeks the help of a debt collection agency in Saudi Arabia to obtain its financial rights from the debtor. We also add that companies have the right Go to the debt collection agency directly without sending a reminder to the debtor.
Features: How can a debt collection agency support your company?
There are some advantages that you will get if you use a debt collection agency, which are:
- Save a lot of time and effort
When companies use a debt collection agency, they can save the time and effort spent dealing with individuals who are late in paying to obtain their financial rights. This gives companies enough time to focus on the company’s core business instead of wasting time asking customers to pay.
- Skill and experience in dealing with debtors
The debt collection agency is distinguished by skill, experience, seriousness, and the art of dealing with clients who are late in paying. It also has the ability to follow multiple methods that will persuade clients to pay the amounts they owe, and this gives companies a greater opportunity to obtain their financial rights from clients.
- Save money
When companies use a debt collection agency in Saudi Arabia, they save the expenses of managing the collection process directly.
Conditions that must be met by an agency that collects debts in accordance with the Saudi system
Article 7 of the licensing rules for activities supporting financing activity stipulates that there are some conditions that must be met by every person who wishes to be nominated for supervisory and executive work. These conditions are as follows:
- Requesting vocational qualification or work eligibility stipulated by the Central Bank of Saudi Arabia.
- Permanent residency in the Kingdom of Saudi Arabia.
- He must have theoretical and practical qualifications and have good experience in the field.
- He must adhere to the financial provisions stipulated by the Kingdom and not violate the market system or the supervision of banks or insurance companies.
- If he has committed any crime, he will be saved by honesty.
How to choose an excellent debt collection agency in Saudi Arabia?
You must ensure that the agency is licensed by the Central Bank and also ensure that the validity of the license is well-reviewed. When choosing a debt collection agency, you must take into account several criteria to ensure that you choose the most appropriate partner to meet your needs and ensure effective debt collection. Here are some criteria that you should consider. :
- Experience and Reputation: Check the agency’s record in the field of debt collection and evaluate its general reputation. You may need to search through reviews and recommendations from previous clients.
- Debt Specialization: Make sure the agency has debt collection experience in the industry to which it belongs. Strategies and requirements can vary between industries.
- Licenses and Permits: Verify that the agency is licensed and legally recognized to carry out collection activities in your region or country.
- Cost and contractual structure: Compare service costs between different collection providers and inquire about contractual structure and how fees are determined.
- Technology and Security: Ask for information about the technologies and tools the agency uses in debt collection and how it protects data and privacy.
- Coverage Network: Check the strength and efficiency of the agency’s geographical coverage network to ensure the availability of services in the areas that need them.
- Service flexibility: Make sure the agency offers flexible, customized services that meet your specific business needs.
- Reporting and Monitoring: Ask what type of reports and information you will receive about debt collection and how performance will be tracked.
- Communication and Outreach: Ensure effective lines of communication and ease of reaching out to the agency for information on collection status.
- Conditions and Guarantees: Carefully read the contract terms and guarantees provided by the agency to ensure complianceWith understandings.
By choosing a reliable and qualified debt collection agency, you can improve your debt collection process and reduce the risks associated with it.
What is the best debt collection agency in Saudi Arabia?
If you have a dispute related to financial claims and debts and want to resort to litigation, do not hesitate to contact the debt collection laws & experts of Al Othman Law Firm, because they have legal experts who have more than 15 years of experience in commercial systems. Further, the experience of their staff of consultants exceeds 22 years in Saudi commercial systems, and Al Othman Company includes the best debt collection lawyers in Saudi Arabia and Riyadh.
Al Othman Lawyers and Consultants are happy to serve you, so do not hesitate to contact them and consult them, as the Al Othman Law Office is considered one of the best offices in the Kingdom.
Call Al Othman office on +966-535-008-888
Frequently Asked Questions
What is the supervisory role of the Central Bank of Saudi Arabia over debt collection agencies?
The supervisory role of the central bank is to establish and conduct oversight or inspection of the facility’s headquarters, conduct interviews with its employees, and review its systems, procedures, and records. The Central Bank of Saudi Arabia may also appoint a third party to take any action at the expense of the debt collection agency in the Kingdom of Saudi Arabia.
How long is a debt collection agency license in Saudi Arabia valid?
Article 13 stipulates that the time period granted by the debt collection agency in Saudi Arabia is 3 years And to the bank Central renewal right.
Conclusion
In conclusion, we can conclude that debt collection is an important process in commercial and financial relations. Managing debts intelligently and professionally helps achieve financial balance and ensure the sustainability of businesses and projects. This process must be based on the principles of justice and integrity to guarantee the rights of the dealing parties, if taken into account. These points and the implementation of effective strategies, in debt collection can be more beneficial and contribute to achieving financial stability.
Call Al Othman office on +966-535-008-888
