There Are Many Things You Should Consider When Collecting Debt
Most companies, regardless of their size, must manage past-due accounts. Some of these debtors pay quickly after overcoming temporary cash flow issues, others take longer, while others still simply have no intention to pay.
At Summit A*R we’ve offered consumer debt collection services to a variety of businesses across the United States for over 23 years. We’ve come across many different types of debts. Our experience tells us that it can be counterproductive to treat every debtor the same way. Every situation is different. We should know because we boast a recovery rate that’s twice the national average. On our website, we have testimonials from both creditors and debtors, who appreciate how we’ve handled accounts and treated people.
There are many things for you to consider when approaching a past-due account:
- Your company’s collection process and credit policy
- The economic factors that may affect this customer’s ability to make payment
- This customer’s relationship and buying history with the company
- Your company’s overall accounts receivable turnover ratio
Considering these factors can help you develop the right short-term and long-term strategy. If the customer is new, then you should follow the terms of the credit policy to the letter to send the right message. If your company is relaxed about pursuing past due payments, then this will not only affect your cash flow, but it may affect your reputation. More delinquencies may also occur as other customers take advantage of your company.
On the other hand, if it’s an old customer, then your company should examine the payment history. If their record suggests that they pay on time, then you may extend the deadline, or offer new payment terms. However, if other delinquencies have occurred, then you should take a closer look at the reasons for this.
You should determine how and when their last debt was cleared. If they’ve defaulted on payments before, then you may stop doing more business with the customer. At the same time, look at your products and services, and check if other customers that use them are also reluctant to pay on time
All these factors should be considered when formulating a collection strategy. You can use the calculators on our website to determine the effectiveness of your collections policy. Remember that every debtor and every situation is different. The wrong approach may force you to write off the debt.
If you’re dealing with a particularly difficult debtor, you may ask them for post-dated checks or a guarantee if they want to continue business with your enterprise. You may stop supplying them with your product if the checks stop.
If you’ve offered a debtor a payment plan where their dues have been divided into manageable amounts, then make sure that the new agreement is in writing. You may consider adding a clause that mentions that the entire payment will be due immediately if they miss a single installment.
While there are many ways you can negotiate payment terms with your debtor, it’s important to remain professional and friendly with them. At Summit A*R we follow a “P.H.D. Philosophy” (Preserve Human Dignity). This means that we treat all customers with dignity and respect. We use a friendly but stern attitude when using our skilled negotiation tactics to recover revenue, and never threaten, harass, or intimidate customers. Not does this bring humanity back to the collections process but it works.
Remember to control your frustration if you’re not getting anywhere with your client. Not only will oral or written threats make it harder for you to recover your revenue, but you may land in legal trouble. Such threats can be used as ammunition by a customer against their creditor in court.
Keep in mind that some debtors may lash out because they’re under pressure. If they’re being aggressive, then it’s important to stay calm and give them time to vent. Sometimes, it’s possible to achieve a positive resolution after a client has regained their composure. They may even offer an apology because of your calm demeanor.
We have recovered some particularly difficult debt because we have developed multiple strategies that vary with each situation. We can also report your client to the three major credit bureaus. Many people are willing to pay their dues when they realize that their credit score could be adversely affected.
At Summit A*R we also offer Full-Service Litigation. Our highly qualified and experienced private investigator conducts a complete financial analysis of their assets. When we have a clearer picture of their finances, we can perform a cost-benefit analysis of pursuing legal action. Afterwards, we consult with you. If you wish to take this route and are willing to pay the legal costs upfront, our affiliated attorneys will file a lawsuit and resume the collection process until we achieve success.
Sometimes, a final demand letter that states our intentions to pursue litigation is highly effective. When a debtor realizes that a collection agency means urgent business, they are more willing to work with us. However, it’s important to never threaten legal action unless you’re ready to move forward.
Turn to us when you need a trustworthy collection service because we recognize the importance of preserving our clients’ reputations. Our A+ rating from the Better Business Bureau is evidence of our high standards. This rating is only given to companies that minimize complaints from customers. We’re also affiliated with multiple organizations that strongly encourage ethical collection practices.
- ACA International: This trade group has over 230,000 members, including professionals from the debt collection industry. They promote values like leadership, integrity, respect, responsibility, and education and ask members to treat people with dignity and respect.
- International Association of Commercial Collectors: This membership group promotes professionalism, ethical behavior, mutual support, education, and leadership among collectors. I
It’s in your best interest to get in touch with us as soon as possible if you have an overdue account. Studies suggest that the chances of a successful collection decrease with time. Other studies suggest that some customers don’t clear their dues until they’re contacted by a debt collector.
Don’t hesitate to call an associate today at Summit A*R to partner with an ethical and effective debt collection agency. With expert advice from our experienced professionals, you can also develop a winning debt collection strategy and find ways to improve your outstanding A/R ratio.
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This post was written by Summit A•R