Negosentro.com | Eric Reyes | 7 ways for a successful debt collection | here’s no doubt that even the most qualified credit manager will at some point require the services of a debt collection expert. The same applies to businesses or companies that offer credit – they will from time to time require the services of a debt collection agency.
However, before reaching that point you will probably want to try collecting debts by yourself.
The following are 7 ways for a successful debt collection:
Institute a late fee on your invoices
This is one of the best ways of preventing bad debt. It is good to advise your customers beforehand that you will charge them interest as well as recovery fee if they delay in making their payments.
This will help in deterring them from making late payments in the first place. Besides that, it will send a strong message to all your clients about your credit strict credit management strategy.
Learn to take immediate action
You should initiate your debt collection process the very day the payment becomes due. Don’t fall into the temptation of giving your customers a few extra days – because that will be counterproductive in the long run.
You should have someone in your company contact your customer(s) through calls, emails or text messages on the last day of the credit terms – to find out why they haven’t made the payment. Don’t wait even for a single day to pass because the longer you delay, the harder it becomes to recover the debt.
Be firm but friendly
This might sound obvious but the truth of the matter is when it comes to debt collection, you always catch more flies with honey than you do with vinegar. Remember you still need this customer and you might not understand why they haven’t been able to pay the debt on time.
Try and talk with the debtor and find ways on how you can worth together rather than against them. However, do not be too nice – you can be assertive and friendly at the same time.
Persistence is key
This is one of the basic tips that most debt collectors miss. You should understand that a single phone call or email may not necessarily get your debt paid. You have to be persistent and at the same time friendly.
You can put in place a system that automatically sends text messages, emails or phone calls regularly. There are various software in the market that can help you with that.
Always be prepared
They say that knowledge is power and this is very true as far as debt collection is concerned. Ensure that you have adequate knowledge about the customer. For instance, you should be able to know their current financial status and why they haven’t been able to pay on time.
Also, think of excuses your debtor will try to give and come up with an appropriate response before you make that call. If possible, write down everything you want to say so that you won’t forget anything during the call.
Avoid manipulation and confrontation
Try to investigate if the excuse being given by the debtor is legitimate or not. For instance of the debtor is blaming non-payment on someone else, contact that person to find out if that’s true. Avoid using crude and unconventional means to get the customer to pay the debt. Don’t forget that you have a reputation to keep.
Learn to listen
After you have asked for the payment, stop and listen to your debtor. Give your customer an opportunity to explain himself or herself as to why they haven’t been able to pay the debt as agreed.
Find a way work with the customer to reach a win-win situation. Once you understand the reason for non-payment, you will be better placed to work together with the client on how to clear the debt.
In short, debt collection can sometimes be difficult – especially if you are not well prepared. Debts can literally bring to a halt the operations of your business. As such, it is important to come up with appropriate strategies for collecting all your debts on time.
Besides that, you can also hire debt collection specialists to help you with your debt collection. This will not only save you time but also ensure that all your debts are paid on time.
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About the Author:
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.
