Client account (klientkonto)
Also known as client funds, client bank account, segregated account
A client account is the separate bank account where a debt collection business keeps debtors' payments apart from its own operations.
- Holds
- Debtors' payments
- Kept apart from
- The business's own operations
- Purpose
- The money is the creditor's, not the agency's
In practice
When a debtor pays, the money does not go straight to the creditor. It lands with whoever is running the collection and has to move on from there. In that gap the question is whose money it is — and the answer has to be unambiguous.
Client funds are therefore held in an account of their own, kept apart from the company’s own money. If the collection business goes bankrupt, the funds in the client account do not form part of the estate, because they were never the company’s. That is the entire point of the separation.
For a creditor it is one of the few questions worth asking before choosing a supplier — alongside the question of authorisation.
Where it commonly goes wrong
- Assuming the separation is a given. It follows from the rules for authorised debt collection businesses. It does not follow from someone calling themselves a collection agency.
- The client account is reconciled less often than the operating account. That is the wrong way round. The client account is the one holding somebody else’s money.