Collecting outstanding debts can be incredibly frustrating for professional debt collectors. It can be even worse for business owners who have far more important things on their plates than debt collection. The process of making collection calls and sending collection letters can really wear down even the most positive person.
International issues like attempting to collect debt in Europe can add even more fuel to the fire. Chasing after debtors in an attempt to convince them to pay you for services you delivered a long time ago is enough to drive most business managers crazy.
If you are one of them, or if you feel like you are on the road to becoming one of them, here are a few simple ideas to prevent you from becoming worn-down from debt collection:
Thoroughly Screen Credit Applicants
The first simple idea to avoid being worn-down by debt collection is to stop bad debt before it starts. You can do this by placing more emphasis on your process for screening credit applications. Raising your standards for offering credit to customers might cost you a few sales here and there, but the sales it costs you are the ones that are most likely to end up in collection situations.
Bill Clients Regularly
Another way to stop bad debt before it gets started is to make sure that your billing department stays on top of all client accounts. If you are late in sending a statement to a debtor, they might think it is acceptable to be late in sending the payment.
It is important to be as consistent as possible with your debtors. If a debtor knows what they can expect from you, they will also know that you expect the same from them. Regular billing is also essential for keeping debtors and clients fully aware of their current balances.
Keep Your Files Organized
When an account does become a collection situation, the most important weapon in your arsenal will be accurate documentation regarding every aspect of the credit agreement, repayment terms, invoices, and previous payments. Having all of this information together in one place with nothing missing will make you fully equipped to handle the collection.
Most small businesses wait until an account falls behind before they begin compiling all of the documentation required for debt collection. Having all of the necessary information available for all of your clients ahead of time will allow you to transition to collection mode quickly and seamlessly.
Delegate People To Help
One problem that many businesses have is that the entire collection process falls on one person. If you are that person, this can be an overwhelming process that leaves you feeling worn-down and jaded.
One of the best ways to combat the pressure of having a collection situation placed in your lap is to ask for help. Depending on your situation, this could mean asking a boss for their opinion, delegating an assistant to make calls, or even hiring a commercial debt collection agency. Regardless of the situation, debt collection is always more difficult when conducted as a solo mission.
Know Your Rights
Many debt collection situations will involve debtors who feel threatened or embarrassed by their failure to make payments. This can often lead to debtors lashing out or threatening anyone who calls them attempting to collect the debt. In order to properly handle these situations, it can be a huge benefit if you know all of the rules and regulations regarding debt collection.
Knowing what you are legally allowed to say to a debtor and expect from that debtor will make you more confident in your collection approach. This concept becomes exponentially more important in international situations like conducting UK debt recovery in the US. Knowing what debtors can and cannot get away with keeps the power of any negotiation on your side.
These simple ideas will go a long way towards keeping your collection situations on a professional level. That makes them more likely to actually be resolved, and it also makes it more likely that you will avoid becoming worn-down by the entire collection process. In the event that a collection situation reaches an unprofessional level, your best bet is to turn the account over to a commercial collection agency.