What is consumer debt collection?

True.
Debt Collection is gaining importance day by day due to the direct impact it has on the liquidity of the business.
If an organisation / business has an efficient Credit Control / Debt Collection Department, definitely the cash flow will be smooth and it will not affect the day to day operations of the business.
A company to meet its daily / weekly / monthly expenses require working capital and an efficient Debt Collection Department can ensure that the working capital requirements are met by the business.
Some of the causes of unpaid debt are: a) Misjudging the credit worthiness of a customer before granting credit facility.
b) Lack of proper and regular follow up on the outstanding invoices.
c) Invoices are not reaching the right person at the right time.
d) Incorrect invoicing.
e) Customer turns bankrupt.
f) Customer does not want to release payment.
g) Customer is not satisfied with the services offered.
Most of the above causes could be solved if the Credit Controller / Controllers are proactive so as resolve the issues from the supplier's side and the in case of unavoidable issues like bankruptcy, a suit has to be filed by the legal department with a competent court with all the supporting documents like statement of account, acknowledgement copies of invoices submitted, copies of communication / correspondence and copy of duly signed contract.
This file has to be made by the Debt Collection Department and handed over to the legal department for their perusal.
Legal action against a customer should be the last resort after all the efforts to collect the outstanding due amount from the customer has been exhausted.

One of the biggest challenges I met while working in Middle East versus North America is that although on paper / contract, the credit terms’ days are outlined, however, in ME people are under the assumption that receivables are due in90 days.
This caused a lot of problems, the older the receivable gets the harder it is to collect on it.
In NA the contractual obligations carry a lot of weight, although if it’s pertaining to a small amount of debt, it’s useless to perceive in the court of law, however, large amount debt can be pursued after effectively.
While Sherin Dharmasheelan has made valid points, it is getting harder to collect on debts due to economy’s position with businesses barely staying afloat or worse, absconding.
Customers should be researched before granting credit, usually through credit agencies, i.e., Dunn and Bradstreet http://www.dnbsame.com/ficb_why_dnb.html , Emcredit http://www.emcredit.com/en/default.aspx , iCredit Enforcement http://www.icreditenforcement.com/dubai-uae/ , just to name a few.
Customers that have been with the business and are known to have good paying habits should be allowed credit.
New customers or customers asking for large sums should adhere to strict policy terms and be made aware that they will be pursued in the court of law if they fail to pay within the days agreed upon.
I can’t stress enough that a business should always have a signed contract with the customer, preferably with a legal third party involved as a witness.

Excellent Answer