Outstanding debts can completely ruin business relationships. The frustrations of late payments, missed payments, or an account past due can cause creditors to resent debtors. Many times, this results in the creditor pushing the debtor away, which makes collecting the debt even more difficult.
One of the most important things to remember when it comes to collecting debts is that no amount of anger or hard feelings will increase the odds that the debt gets paid. The most effective way to settle the debt is to provide a non-hostile environment for the debtor to work with you to make good on what he owes.
While it can be very difficult to swallow your pride and bury your anger, putting yourself in your debtors shoes might help you better understand their situation. This is especially true when it comes to global debt recovery, where international laws make it even more important for the debtor to want to pay you.
How Did You Get Here?
Placing yourself in your debtor’s situation, imagine how they might have gotten to their current place. They didn’t just wake up one morning with a big pile of debt. It likely happened over a long period of time. That means it is going to take them a long time to dig themselves out. It might take them so long that they don’t even see the point in trying.
Who Else Do You Owe?
If your debtor owes you money, the odds are pretty good that he owes other people money as well. Where do you rank on that list? If the electric company is owed money, they will likely get paid before you because they have the power (literally) to turn the lights out. If the debtor owes back child support, he will have to pay that before you because many states put delinquent child support debtors in jail.
What Would You Do?
Do you best to attempt to analyze the full scope of the debtor’s situation. As a creditor, it’s easy to focus exclusively on the debt owed to you, which is understandable. However, understanding the gravity of the debtor’s situation may give you a different outlook on why they see to make you the last priority.
Imagine if you were in their situation, how would you begin to dig yourself out? Which debts would you prioritize and what types of creditors would you most appreciate? How would you like to be treated?
Of course, none of this makes it acceptable for a debtor to miss payments, but it might help you to understand why it happens.
What Is A Reasonable Timetable?
Many times, as creditors, we want paid what we are owed RIGHT NOW. Unfortunately, that is almost never possible. Given your understanding of the debtor’s income and other debts, what is a reasonable timetable for you to receive payments?
Once again, the optimal scenario for the debtor will probably not be ideal for you. However, recouping your money eventually is always going to be better than never recouping it. If you maintain a professional attitude, you might even be able to keep the debtor as a customer.
What Type Of Communication Would You Respond To?
If you were in your debtor’s shoes, what type of communication would you best respond to? You probably wouldn’t appreciate harassing phone calls in the middle of the night. Would those kinds of calls make you more or less likely to go out of your way to make a payment.
While it probably goes against every bit of your natural instinct, sometime the best way to collect a debt is to cut the debtor some slack. Often, the debtor will appreciate the breathing room and end up paying you back faster than if you applied constant or overwhelming pressure.