There is a myriad of reasons why people ultimately incur debt. The variables involved in life alone make it a must that everyone at a time in their lives incurred some debt. Whether it be loss of employment, illness, or even a death in the family. People will always fall behind in their payments. Debt recovery for any company is not easy in any way because of many factors.
The following tips and strategies will help you to recover debts from your clients in a professional and secure fashion.
- Collect customer identification information: always make sure you collect people’s information when they come and sign up for either utilities or for a service that you will be performing for them. Information like next of kin, social security number, place of employment, and so on is very necessary. With this information, it is easy to get clients that are defaulting.
- Get customer information from more than one source: you can also verify the data and information given to you by a client from other sources. This helps in ensuring that the client has not falsified any information that he has given your organization. You can verify through social services, licensing board and even from his place of work and his tax returns.
- Choose the debt recovery company carefully: when checking for debt recovery agencies, the first thing to search for is their primary strategy to their success. The most successful collection agencies always explain to you, the different strategies that they use according to the person involved or the situation.
- Send demand letters to defaulting customers: your lawyer should draft a formal letter of demand to erring customers on behalf of your organization. There are laws guiding such demands and the letter should include; detail of good or service involved the date, how much is pending and the consequence of not paying up your remaining balance.
- Make sure you retain customers while collecting debts: sometimes to get a defaulter to pay, threats especially of losing the intended service can be used on that defaulter. When it is a case where the client can choose another organization, threats may just hasten the client to make a change so most times, it is better to use the soft manner of approach to make the client pay up their outstanding debts.
- Make collection decisions carefully: getting defaulters to pay up their debts should be done carefully. Your business cannot afford to be owed, but also you should make sure you keep your loyal customers no matter what. You should put into consideration the prevailing economic climate and other external factors that will affect your clients in the short run. Also, weigh the amount of money you will spend in collecting the debt from the client and see if it will be worth it.
- Contact debtors as early as possible: you should get in touch with defaulters as early as possible before they do run into higher debt. This way will help you to decide on various options of how the debt can be collected.
- Never threaten debtors: the pertinent that the collector does not threaten the debtors out rightly. When debtors are contacted, do not insult them nor abuse them for any reason. This tactic rarely works and you can be sued to court in the process thereby incurring heavy fines while still paying for legal representation.
- Employ different policies for taking care of collections that involve risk: you must have a way of handling collections that involve risk. Clients that have incurred debt due to the tragedy suffered should be approached in one way. While some clients excuses can utterly ridiculous and they have to be approached in another manner.
- Make it very easy for the debtor to pay you: make sure u give the debtor all the payment options available to them. Make sure all contact information is correct and also send a postal address for the payment. If you send a remittance envelope, make sure the information on it is correct.
- Debt recovery should be the priority: make sure all your collectors go after the larger debts first since their returns are greatest in terms of time. You can also employ a credit analysis organization to find out which clients are in the best of their finances and which are not.
- Change the terms of the debt: most defaulters are normal people who never intended to default or owe. A lot of them owe due to various reasons and unforeseen circumstances such as crises in their businesses, being defrauded among other excuses so changing the terms of the debt to suit their current finances will go a long way in making them pay up faster.
- Be personal with the collection: not everyone is the same and neither are their debts the same. Taking a personalized stand towards debt collection makes it easier to collect debts because everyone is treated differently and handle situations differently.
- Systematically follow up on the debtor after the first contact: always follow up on the debtor after you have contacted him for the first time. Remember what he says and promises he makes on the debt. Also, remember when he says he will mail the check for the debt so it will be expected. In a case where the client defaults again, additional contact is necessary.
So there we have some tips and strategies to debt collection that will help and enhance the rapidity of how your debtors will pay up their outstanding debts.