Debt Collection Tips
Your Business Can Use Today
to Collect Bad Debt

Knowing debt collection tips are important issues for almost every business or organization. While many businesses and individual professionals today prefer acquiring the professional services of a good debt recovery agency, there are certain important tips and strategies which you must know about debt collection, just so that you can work more effectively in case you decide or prefer to handle your past due accounts yourself in house, as well as give added input to the collection agencies concerned, if and when you opt to outsource them.

Debt collection tips can help you make the right decision while you are working on the collection of your past due accounts from your clients or customers who are yet to pay. Here are some such important debt collection tips that you might benefit from:

Keep a Positive But Firm Attitude

• Attitude is an important factor for a debt collector. While talking to the client for debt recovery you must have a positive and an upbeat attitude. You have to be firm as well as polite and your intentions of recovering the debt at the earliest possible must be made very clear to the debtor.

• Recognize that many business owners reluctantly pursue their past due accounts for fear of losing future business, and/or angering the customer. But know that a customer who continues to ignore his/her bills aren't likely to continue to do business with you anyway.

• One of the basic debt collection tips is that of maintaining communication. Don’t get tired and give up, especially in the case of small sums. Remember also, that a client or a customer, who is involved with you in business and is at least responding to your correspondence regarding paying a past due bill, has a fair chance of actually doing so.

Have A Clearly Written In House Collection Plan and Strategy

• It is a wise idea to have a well devised and written plan or strategy for collecting debts from your customers. An integrated collection policy which is very consistent will definitely help you in the long run. It would help you collect your debts without causing any harm to your business relationships. Both the lack of a clearly written internal collections policy for accounts past due 60 days and less, along with the reluctance to hire an outside collection agency early on once accounts go past 60 days are among reasons why accounts receivable and cash flow suffer.

• Keeping track of all the past dues is important for every business owner. An automated system may help in this process. Generally, a payment which is due for more than 60 days is considered to be debt. An automated system will remind you about those customers who are debtors.

• Something to remember: accounts 60 days or less past due are highly collectible. Those 90 days and over become increasingly difficult to collect. Devise a solid plan to internally work those accounts 60 days and under. Focus your in house efforts on tackling these. This will maximize your recovery. Use collection letters (use these sample debt collection letters for ideas), make phone calls, offer discounts or full payment incentives here. The point of all this is consistent, constant contact with your customers.

• Use phone calls as an additional tool to the letters, and should compliment your written communications. By calling early and often enough, you can flesh out potential problems and offer solutions to get payment or make arrangements. When contacting debtors, clearly identify yourself, verify that you're speaking with the debtor, state the amount past due, state why you're calling (i.e. "I need you to make full payment today."). Get quiet and let the debtor respond. Its very important to be firm and non-emotional at this point, getting neither angry, nor too talkative or friendly. You need to communicate the seriousness of your phone call.

• If negotiating terms of less than the full payment, ask what can be paid TODAY, and ask when to expect payment. Restate the terms so that the debtor understands clearly what he/she is expected to do. Get firm dates and money amounts from them before ending the call.

Knowing When to Hire Outside Collection Agencies is Crucial

• It is usually a good idea to enlist the help of a professional debt collection agency in maters that require serious attention. These are the accounts that go 60 days or more past due. They may even provide you with various positive and effective debt collection tips gathered from their experiences.

• Hire a third party collection agency to handle everything past 60 days. You'll save far more time doing so, and the debt recovery agency will prove far more successful on these problem accounts than you will internally. When considering third party collection agencies, ask to see actual letter samples that they send to debtors. You want to know how they're communicating with your customers. Look for agencies that make phone calls, in addition to sending collection letters. The more problem accounts will require actual in person contact.

• Speaking of in person contact, make sure the collection agency is licensed nationally, not just regionally. If your customer(s) moves out of state, a local agency not licensed there will not have legal jurisdiction to collect in that or additional states.