Debt collection is a norm in all operating businesses. It is a prominent element in the business landscape and deserves to be understood. Especially in an economy like today, when customers have a lot more trouble in paying off debts than average, you need a few tips and tricks up your sleeve to get things done.
When invoices go unpaid, it may seem like the best time to involve a commercial collection agent to hasten up the repayment. Such collection agents and agencies are experts in the business to business debt collection.
Since every industry seems to have agathokakological (both good and bad) ways to collect debts, here is a list of simple steps to increase your success. We hope that by the end of this read, you would have learned a thing or two about debt collection. Without much ado, let’s jump right into it!
Prepare beforehand
Prior preparation may seem like a step in common sense, but many a time, people tend to forget it.
Before making the initial contact with delinquent customers, it is ideal for you to complete the preparation. Make sure that you have comprehensive and accurate information about the client.
Collecting the copies of all contracts, invoices, and other information would become a vital source of confidence for you. Knowledge about the customer would help you speak better professionally.
Document the minutiae
When speaking to a customer about their outstanding debt, you must take careful notes about the entire discussion.
Conscientiously collecting the customer’s comments about the repayment would be beneficial for you in case of a debt dispute in the future. The use of tracking software would come in handy at times like these because they let you store data into the system while it’s still fresh in your mind.
Continue to update the file as new details emerge. The accurate record of information will become a weapon in your arsenal.
Avoid assumptions
The way you cannot receive a business loan without proper documentation. Similarly, you cannot make your initial debt collection call without verification.
There is a substantial possibility of a misunderstanding between your team and the client. Don’t be straightforward in alienating the customer because there is always the potential for future business. There could be an accounting mistake on your part instead of a collection problem in the first place. Being careful about your words and tone at this point would be beneficial for you.
You should wait and listen to the client’s perspective. You cannot just involve court enforcement services without doing your homework. Accuracy in your documentation is essential to you in every step of the way.
Remain pleasant and self-conscious
The tone of your voice during a conversation has a direct impact on your success. If you initiate the discussion in a non-confrontational and friendly tone, you are more likely to receive a positive response from your client.
Make sure that you are speaking to the right personnel before discussing the unpaid invoices. You can offer to help them as a pleasantry. Ask them if they require any further information. Showing that you understand their position or that you care about the debtor’s side of the story would prevent them from acting defensive. Remember to exude detachment from the situation because your ultimate goal is to collect the debt in its entirety as soon as possible.
Avoid manipulation, confrontation, and harassment
Try to find out the legitimacy of the debtor’s excuse for not paying. Let’s illustrate this with an example, if an individual blames someone else for nonpayment, then confirm it by contacting the other party. Carefully listen to what they are saying to get a sense of their authenticity. Your gut feeling is the best help here.
Always maintain your calm even if your debtor becomes abusive during the conversation. In such a case, you can suggest to call back at a later date.
Don’t lose your control in any situation and carefully listen to what the debtor tells you. Try to keep the dialogue constructive as long as you can. It is critical to make the debtor realize that they are making progress.
Provide options
If your client has a hard time paying off their debt, then there is a possibility that they might be able to make payments in the long run. Find a solution that works in favor of both the parties, you and your client. Keep your goal in mind at all times. You are working on getting the entire debt repaid at the earliest. A complete assessment of the situation would allow you to define a workable solution.
Remind the terms
After a plan for payments has been defined, a verbal summary of the program must be given to the debtor. This summary should carry the specifics about the time of repayment, the form of payment and other such details. This information can be later documented in written form via email, letter or fax. Ask your debtor to contact you after each payment for verification.
Communicate regularly
Communication should not be disrupted, even when the client cannot make payments right away. They may be able to pay you in the future. If you continue with talking and listening to the debtor, you can help them figure out a way to start paying sooner. It would help if you kept in mind that old debts are harder to recover. But then sometimes the circumstances may turn for the better.
Final Takeaway
Debt collections are relatively common, specifically during economic downturns. The use of these techniques would increase the odds of your success. If all else fails, then there is no harm in consulting a commercial collection agency or court enforcing services.
