Chasing and collecting debts happen in nearly every business. In the current economic climate, your customers may be struggling more than usual to pay their debts. However, there are good and bad ways to perform debt collection. We have put together a list of a few ways that will help improve your success.
Have Accurate Information
Before contacting the customer, make sure that you know as much about them as possible. Gather all information about the debt so that you can speak professionally and knowledgeably. This will put you in a much stronger position when negotiating.
Start with a Reminder
This is one of the best ways to start a conversation. Every now and then you may find someone who genuinely forgot and just needed a reminder. Even if this isn’t the case, starting with the facts will start negotiations on the right foot.
Approach Them as Equals
Nothing will make someone shut down more quickly than being treated as inferior. It won’t force them to pay you and they will probably just want to be difficult. Treating them as an equal however, will make them far more receptive and likely to help.
Make sure that you write down all the details of what is discussed while it is still fresh in your mind and keep your notes as up to date as possible until the debt is paid.
Remain Polite and Calm
Being friendly and having a non-confrontational tone may help the customer respond more positively and prevent them from becoming defensive. If they do become abusive, then always try to remain calm. You might suggest calling back later but regardless of what happens, try to keep the dialogue as constructive as you can.
Find Out the Reason
The debtor may have a valid reason for late payment, or there may have been a mistake. Don’t assume there is a bad motive behind non-payment. Try to determine whether the reason is genuine or whether they are just looking for an excuse. Sometimes it is worth doing a little bit of background research to find some evidence of what they have told you. Being broke is fine, but if they’ve just posted a picture on Facebook of their new car, then they probably haven’t told you the truth!
Your goal is to get payment for the entire debt as quickly as possible. Set out a payment plan or an agreed payment date but always remember to be realistic. If they simply don’t have the money, you won’t get any more by being forceful.
Repeat the Terms
Once a plan has been agreed, verbally repeat what has been discussed. This should include all the specifics of when the debtor will pay and how they will make these payments. Add these details to your notes and ask to be notified once payment has been sent.
Maintain a Line of Communication
Even if the debtor can’t pay immediately, keep in contact as circumstances may change and payment may become possible. Having a line of communication open the whole time could help you figure out a way to collect payment sooner.
Debt collections can be difficult, however using these tips can help increase your chance of success.
If all this effort still results in non-payment, then realistically this client is probably not the sort of person you would choose to work with.
Having your ideal client means that you are working with people who you want to help and cuts down on the stress. Look at this article which explains how you can pinpoint and find your ideal client.