For many small business owners, offering credit and attempting collections is not their strong suit. Many businesses are forced to offer credit terms to their customers in order to keep the sales coming in, but these businesses are not always well-equipped to handle the collections side of the business.

Because some small business owners are forced to act as their own collections department, there are many common mistakes that are made out of their inexperience. Learning to avoid these common mistakes is a great way to ensure that your bad debt collection department will fare better than average.

Here are five common collection mistakes you might be making right now:

Assuming Honesty 

Many inexperienced debt collectors are too willing to believe that their debtors are telling them the truth about their situations. While there are many debtors who are honest about their situations, believing that any one debtor is telling the truth opens the door for you to be taken advantage of.

While you might prefer to think of yourself as a business owner focused solely on your particular industry, when it comes to collections, you will have to take on the persona of someone conducting a bank loan recovery process. This means you absolutely must critically assess anything a debtor tells you.

Misunderstanding Risk 

As someone who chooses to extend credit to clients or customers, you must understand that even the most credit-worthy customers still contain some risk. Just because they are on sound financial footing today does not mean that they will be in the same place one week, one month, or one year from now. Every time you extend credit, you are taking on risk that must be properly evaluated.

Ignoring Warning Signs 

When debtors gradually start sending in payments later and later or failing to return phone calls, many inexperienced creditors will ignore these clear warning signs and hope that things work out better next month. If your debtor begins to get into financial trouble, you want to be the first one to recognize the situation, not the last, so keep your eyes open for any potential warning signs.

Accepting Customer Proposals 

Just because a debtor offers you a proposal to settle the debt does not mean that you are getting the best offer they could possibly make. Many inexperienced debt collectors will jump at the opportunity to get something from a debtor, when they could have actually received more if they held firm and negotiated further.

Not Fearing Time Decay 

Inexperienced debt collectors are notorious for under-appreciating the severity of time decay with respect to collecting a debt. Every day that goes by without payment from a debtor makes the debt less and less likely to ever be collected. That is why you must not be willing to put off making the difficult debt collection calls.

As you can see, many of the most common debt collection mistakes come as a result of inexperience. While the only way to gain experience is to try and make mistakes, we can also learn from the many inexperienced people that came before us. Combining their advice and expertise is a great way to avoid making the same mistakes in your business.