Golden Rule of Debt Collection

Debt collection often becomes a big challenge for small businesses. They lack the skills to communicate effectively with clients to convince them to pay, which hits their bottom-line. A common mistake businesses make is to ease off the pressure, which makes customers believe they may delay or juggle payments.

Regardless of the collection efforts made, a rule which always applies is to stay on the account until getting paid. Businesses need to be prompt in sending the bills and monthly re-bills. Rather than waiting for the end of the month, notices must be sent once an account is overdue.

Being prompt doesn’t mean harassing the debtors. However, people owing money must know that the creditor is following the matters closely. A creditor need not dispatch a string of messages daily to the debtor. A phone message a day is enough to keep them on tenterhooks. The messages may be polite and may not contain an iota of threat, yet they will contribute in keeping the pressure.

When calling debtors, the calls must be short and specific. The tone should be calm, yet should maintain a sense of urgency about getting paid. The caller should come across as a professional and avoid talking about anything personal.

A customer may have genuine financial problems and if they really do not have money to pay, no amount of insistence will do. The approach in such matters should be to ask them what amount they can realistically afford to pay. The payment may be rescheduled if the customer agrees to it in written.

Along with the contact on phone, a series of letters must also be sent to the customer, slowly escalating in intensity. The creditor must save the copies of the correspondence along with the notes of telephonic conversations.

One way to encourage the debtors to settle the debt is to offer them a deep discount on immediate repayment. If an account is fairly large and a business is doubtful about ever collecting the debt, better option is to take the maximum possible amount from the debtor and settle the matter.

If none of the above methods work and a business simply lacks the means to pursue a case, it is better to take on board professional collectors. Well versed with every aspect of debt recovery, they can use their expertise to boost debt collection. There are global debt recovery firms which can offer services outside the national boundaries. If a business’s debtor has settled in another country, hiring an agency may be the right step.