Dealing with delinquent debtors is becoming more and more common in today’s business environment. While none of us look forward to handling these trouble accounts, we also don’t have a choice in most instances. The whole world operates on credit, and sometimes we make mistakes and offer that credit to the wrong people.
Once you find yourself in a situation where you are working with a debtor who has fallen behind on their payments, you are almost certain to hear at least one excuse as to why they weren’t able to make their payments. One of the best things you can do in these situations is to have a response prepared for all of the most common excuses.
Let’s take a closer look at six of the most common types of debtor excuses and the best ways to handle them.
The Check Bounced
One of the ways that delinquent debtors will try to buy themselves some additional time is to write you a check that they know is not going to clear their bank account. However, it can take up to two weeks from the time you deposit the check for your bank to notify you that it bounced…which is exactly what they wanted.
The best response to a bounced check is to demand immediate payment in cash. Don’t let the debtor try to buy more time by slipping you another bad check. Cash is king.
Breaks Promise of Payment
Debtors who have experience with delinquent accounts will often make you promises about when they will be able to make payments. They also have a bad habit of not delivering on those promises.
If you find yourself in a situation with a bunch of empty promises, you are going to want to keep detailed notes of each and every promise that was made and whether or not each promise was kept. You can then use these notes in your collection process.
Never Calls You
Perhaps the most frustrating type of delinquent debtor is the one who never bothers to call you about their account and doesn’t return any calls you make to them. They prefer to bury their heads in the sand, hoping their problems will just go away.
Anyone who can’t be bothered to keep you posted on their situation clearly doesn’t have a strong desire to maintain a business relationship with you, so this type of debtor should immediately be moved through your collection process.
Assuming that you are conducting a completely legitimate business, just about anyone who demands documentation from you is likely just looking for a loophole to get out of paying you. This is one of the most common pieces of advice passed around between delinquent debtors.
The best defense against demands for documentation is to have all of the necessary documentation ready to go at a moment’s notice. This is why we always stress that you need to put an emphasis on keeping all of your records up to date.
Another common tactic from delinquent debtors is to threaten to file bankruptcy and walk away from their debts. This can be a scary idea if you aren’t prepared for it. But assuming you did your homework before extending credit, you should have a pretty good idea of where a person stands, and whether they would really declare bankruptcy over a few outstanding debts.
Blames Macro Issues
Out of all of the possible excuses, debtors who blame their problems on macro issues like the economy or the real estate market are quite possibly the most aggravating. They are simply grasping at straws in order to come up with any excuse to get themselves off the hook.
When you are dealing with a debtor who starts blaming the economy, just remind them that you are dealing with the same economic conditions, and that is why you need the people you do business with to honor their agreements with you.
Dealing with the excuses of delinquent debtors isn’t ever going to be something that you are going to look forward to, but with a little bit of preparation it is something that can definitely be at least a little less aggravating for you in the long run.