An Essential Debt Collection Technique

Debt Collection Technique

For those of you who have had the experience of facing the hassles of debt collection, you would probably agree that debt collection in itself requires detailed planning and even better execution. With debt collection becoming another part of any legitimate business, its time we all woke up to its careful execution.

A well planned and tactfully executed debt collection technique can save many businesses in a time of financial crisis and limited positive cash flow. It also has the effect of making the business owner aware that because of future non-payments it is wise to be active in the debt collection process right from the beginning. Most debt collection techniques could be classified into two distinct parts –

Pre-Due Date Debt Collection Technique

As a part of the debt collection technique, secure the signed agreement and make the transaction with proper clarity. Once this is done, issue a detailed, simple and clear invoice right on time. Make sure it has been delivered to the right person with a signed acceptance of receipt and a service as well as a collection call made right after a day or two. You need to issue a deadline of 30 days for payment to be made before proceeding. In fact, it is recommended that you specify a particular due date (eg. March 5th), instead of a general statement like “payment due in 30 days.”

About 10 days before the payment due date, make another call and inquire whether the customer is satisfied with the service or the product. Once you are done with that you are reassured that there is no problem regarding your services and the customer has no legitimate reasons for not making payments on time. If your customer has any problems, you still have plenty of time to fix it so and resolve the dissatisfaction. Repetitive as it sounds, don’t forget to remind the client about the payment due date, in fact its one of the most time tested debt collection techniques.

Post Due Date Debt Collection Technique

You could try out several such techniques once the due date has expired. Whatever you do remember don’t antagonize the client and turn him into a foe unless it’s absolutely necessary. Often in such cases patience and in more serious ones debt recovery agents are the key to success! Give the client a decent enough grace time of about 5 days to pay up after which you might think of more serious consequences.

In the meantime you might opt for casual reminders too, by mail if necessary. Whether it is making calls or sending mails, it is absolutely necessary that you discover the intentions of the creditor. You might also inquire if the customer isn’t having any sort of financial trouble. A sympathetic ear may at times be the right approach, in making the client feel that you care about them, and not just getting your money!

After a span of 10 days with no communication or payment arrangements from your debtor, it is time to send reminder letters to the client. You should also make reminder phone calls. Your last letter, spaced about 15 days from the first one, should communicate the seriousness of further delay. It should also indicate the involvement of debt collection agencies as well as the make a mention of legal steps that you are considering.

Whatever debt collection technique, you try out remember antagonizing your client should be the last technique. Make your communications polite yet firm, you should also remember the need to act fast in such cases.