First-party collections
First-party collections is when a business collects its own overdue invoices in its own name, rather than selling or handing the debt to a third-party collection agency. Because you are the original creditor, first-party collection of commercial invoices is generally outside the US FDCPA that governs third-party consumer-debt collectors.
Why first-party matters
Collecting in your own name keeps the relationship intact and keeps more of the money, since agencies take a large cut. It also usually sits outside the strict rules that bind third-party collectors. That said, keep every communication truthful and professional. See how to write a demand letter for a compliant approach.
Frequently asked questions
What is the difference between first-party and third-party collections?
First-party collections is a business chasing its own invoices in its own name. Third-party collections is when a separate agency, which bought or was assigned the debt, does the chasing. Third-party consumer-debt collectors are bound by the FDCPA; a business collecting its own commercial invoice generally is not.
Is first-party collection subject to the FDCPA?
Generally no. The Fair Debt Collection Practices Act governs third-party collectors of consumer debts. A business collecting its own commercial invoice in its own name is a first-party creditor and is usually outside the FDCPA. You should still keep every demand truthful and check for any state-level rules that may apply.
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