Guide to In-House Debt Collection
Guide to In-House Debt Collection
Guide to In-House Debt Collection
In-house debt collection can be an effective first-line of defense to help your company resolve late payments early and avoid future headaches.
Avoid Bad Debt Inform Your Customers:
Even a small lack of clarity in your company's payment terms can lead to future disputes. To avoid this, make every effort to ensure that your customers understand the terms of their transactions, including paymentamounts and due dates. Be sure to inform customers of the consequences of becoming delinquent, such as late fees or suspension of services. Taking the time to inform your customers can help you make sure that payments are not avoided
later.
Make Debt Collection Policies For Your Company:
If your company has not made a clear set of policies for in-house debt collection, you may find that your results are poor or inconsistent. Setting a rigid set of policies for your company's in-house debt collection will help you to be consistent in your approach to pursuing bad debt, leading to more effective debt recovery and eliminating the occurrence of missed opportunities; or, even worse, the appearance of lack of motivation to pursue debt or even favoritism. Make a strict schedule for in-house debt collection and be sure to follow it up by setting clear guidelines for your company for how and when customers will be contacted regarding delinquent accounts.
Identify Bad Debtor Types Able or Not
There are debtors who are, for whatever reason, unable to pay and there are debtors who are able to pay. You may encounter debtors who have suffered from an economic hardship, such as lost job, decreased wages, unforeseen expenses, et cetera. Contacting these debtors on a regular basis can help you to ensure that they pay the debt as soon as they are once again able to do so. There are also debtors who are able to pay you, but refuse to. Such debtors may have more experience in debt avoidance. They might dispute part or all of the amount owing or otherwise deny responsibility. These accounts will require more attention.
Contacting Your Customer Pursuing Bad Debt
It is important for your company's debt collection effort, to keep in touch with your debtor. This will show them that you have not forgotten or forgiven the bad debt. Make sure your debtor is aware that the payment is past due, reminding them of the amount and length of time it has been owing, and informing them of any consequences resulting from non-payment. Never harass debtors, falsify information or make threats and never insult, degrade or use abusive language when contacting a debtor. If you informed your debtor of consequences or taking further action, be sure to always follow through so they will take you seriously. To avoid miscommunication or misunderstanding, be sure to keep a record of all contact made with your debtors.
Referring Debt Collection Accounts
Statistics show that after 90 days, the effect of in-house collection efforts wears off by as much as 80%.Delinquent accounts within the 60-90 day past due time-frame are more likely to yield positive results from in-house debt collection efforts. By this point, you have likely requested payment at least four to six times in the form of phone calls, letters and statements. After systematically pursuing your debt collection accounts for 60 to 90 days from the initial due date, with no recovery, you're being delivered a message by your debtor. After this point, it becomes increasingly more difficult to convince a debtor to pay you.
Referral to a third-party debt collector, who can motivate debtors to pay you the amount owed without delay, may succeed in collecting accounts, where in-house efforts were insufficient.
Debt Collection Resources:
Debt Collection Agency
Debt Collection Agencies List
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