At some point in time, during their business course, they meet the clients/customers of the following types:
- One, who go to any lengths to avoid making their payments,
- Second, who have a huge amount of payment due and are trying to pay sporadically,
- Third, who pays all their dues on time. (Except on some unavoidable events)
Out of the list the third is the most loved in any business, and second is also understandable. However, the first one triggers any business. With a small organization, the impact is all the more because of the limited availability of resources. It disrupts the cash flow and ultimately negatively impacts the business’s productivity. This is exactly when you need to devise a debt collection strategy.
Here’s how you can get started:
1. Don’t get infuriated, stay calm
Like I said, unpaid clients can really trigger you, but you cannot let your emotions overpower you. Things will only get worse. In my experience, when clients feel your wrath and they don’t feel the same vibe during your meetings, they stop cooperating avoiding any means of contact.
Remember, your mental state is everything, and that would define your interaction with the debtor, and how he responds to you. Considering unpaid bills, your anger is justified but if you want to recover your debt you can’t let your frustration talk. Thus, try and be polite to your debtors even on phone calls. A buoyant mood increases the chances of you getting a positive response from your debtor.
2. Know your rights and what can you do
Debt collection is a process, and you just cannot emerge successful without any prior knowledge about it. If you are not aware of it, the sooner you educate yourself, the better it is. Seek an appointment with an attorney, or lawyer, and discuss the entire process. Ask questions if needed.
For instance, how many of you know that in the States, you can look up for someone’s Social Security Number if that person is evading your debt collection efforts. Probably none! So, knowledge never proves to be useless.
3. Document everything properly
The debt collection process is very critical: the debt you were trying to settle on good terms might also end up in a legal battle, and despite you being right, the decision might not be in your favor. Courtesy, you did not have correct paperwork and documentation that could prove your debtor’s default.
Everything recorded acts like evidence in the event of crisis calls, confirms cedar financial. Thus, all forms of communication must be recorded: Phone calls, emails, and even notices. Any information can be helpful and any piece of missing information can prove to be fatal.
4. Do not harass your clients
Harassment, in any form, should never be adopted. However, don’t confuse persistence with harassment – while, the former is necessary to realize your debt, the later can lead you behind bars.
Harassing is morally not correct, and you do not want to forget your ethical behaviour just because you are not paid your hard-earned money. No matter, how big the debt is, or how ignorant the clients are – DO NOT HARASS THEM.
Calling them every day until they do not pay up will be registered as harassment. On the contrary, checking on them once in a week or 15 days can be defined as persistence. If you don’t know how to deal with them professionally, hire a team of debt collectors for you to do the task. Agencies like cedars business services knows the ethics of debt collection very well. Here you can find more details about their work culture.
5. Offer a settlement
As the saying goes, ‘Something is always better than nothing’.
If your client has been ignoring his payments for long, and none of your efforts are being materialized, it’s time for Plan B – settlement. There will come a time when you would simply have to write off the payment as bad debts, thus one final resort is to ask your client one final time.
Instead of pestering for the repayment of the full amount when your debtor has turned insolvent, offer a discount. Understand that time too is precious, and all the resources you have been investing further for the collection of the debt are instead going into vain, so a settlement can prove to be a win (not entirely, but a win is a win, anyway!).
The whole process is not at all fun, but you need to do it. Nobody cares about your money, but you. Keep that in mind but don’t let your emotions get into your head.