Debt Collection Strategies

Collecting debts is not a child’s game; it needs patience, and due diligence, which can go a long way in being able to collect effectively and efficiently. Some of the best debt collection agencies have honed their skills over the years, thereby making their strategies fool proof and satisfactory. For this very reason, it is imperative to understand some of the best possible collection strategies in the market, which can go a long way in helping individual and companies collect their outstanding dues from customers’ and businesses alike. Here is a list of strategies which can help make collection more effective:
  • Regular reminder calls/mails: Many a times, customers might not be aware that their payments are due. In order to maintain a good customer service, it’s imperative to have a system which monitors and makes regular reminder calls and sends regular mails to customers with outstanding payments. This way, customers can be kept on track, when it comes to achieving payments on time.
  • First demand/second demand notices: If the customers continue to ignore the payment reminders even after the reminder calls and mails, then you can start with your internal collection calls, wherein customers will be asked to pay the pending dues. In case of first level escalation, the idea is to be a little assertive, but still be within the collection limits. However, post the second demand notice, it’s best to invoke legal action on the defaulting customers, to ensure the payments are made on time.
  • Skip Tracing : Skip Tracing is a technique use to trace Debtors as getting in touch with Debtors is the most important thing in collecting debt.
  • Never use abusive language: Abusive tactics and foul language will get you nowhere when it comes to collecting outstanding money from your customers. Collectors, as a thumb of rule, should refrain from using any kind of threats towards the debtors, or even make false claims to lure the customers into paying up. Use of abusive language and false claims can land the collecting agency into a legal feud.
  • Remain calm and composed: Debtors can often go on an aggressive or confrontational stance, as soon as they receive collection calls. During such a kind of behavior, it is imperative for the collector to remain calm and composed, so that the debtor realizes his/her mistake and owns up to the payment. Instead of getting aggressive with the debtor, it is necessary for the collector to try and encourage the debtor to pay off the pending dues, which can help both the parties involved.
  • Employing external agencies to do your bidding: Once you have exhausted all possible sources of collecting the outstanding dues, the only option left is to go ahead and hire external agencies to collect on your company’s behalf. These agencies will negotiate with the defaulting customers by making regular calls and sending reminder mails to ensure maximum collection. At the same time, whatever amount is still left pending will be put as written off debt, since it can’t be collected by any possible means.
During the collection phase, it’s important to understand the situations of the customers and why they are unable to make the payments. If a customer has lost his job or has been the victim of some other tragedy, chances of default will become prominent and eventually cause people to default heavily.

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