Accounting Overview
Debt Collections accounting can be a complicated process that is not easily handled by standard accounting software. This is because of the requirement that payments must be allocated to different balance segments (principal, interest, costs, and fees) in an order that is specified by the client. The allocation has a bearing upon how commissions are calculated. In addition, clients generally have unique reporting requirements that may be in the form of electronic files or special reports, or both.  There is no standardization in this regard; customized code is generally needed to handle each client’s preferences.

Debt Tracker provides a Payments Manager and a Costs Manager to facilitate the process of accounting for payment remittances and cost reimbursement requests. While Debt Tracker does not yet currently interface with standard accounting packages, it’s methodology provides a handy means of correlating the collected payments and cost expenses to the entries made in standard accounting systems for reconciliation and auditing purposes.

Payments must be reported separately to clients. In some cases, remittances may have to be broken into multiple batches where clients represent more than one debt owning entity. Some clients require payments to be reported by payment segment, further complicating the accounting and reporting process.

Payments may be collected and posted at different times and held in a bank account until they are remitted. Keeping track of whether payments have or have not been remitted is a difficult and time-consuming task without the assistance of a well designed database management system. The same is true in terms of accounting for reimbursable cost expenses.

In addition to the regular reporting of payments, costs, and accrued interest (generally required on a weekly basis), clients may periodically require other types of accounting data to be used for account reconciliation.

Other complications include the accounting of payments and cost reimbursements that may be due to affiliated attorney firms to whom accounts have been referred. Generally, commissions are shared in a specified arrangement and costs are reimbursed in another specified arrangement that may not be the same as that between the firm and the client.

Debt Tracker provides a means of handling these types of client requirements.