Collecting an outstanding debt is never an easy task, especially when it involves a longtime client or customer. Many businesses presented with debt collection lack the knowledge and skillsets to pursue the outstanding debt and often put off the collection process indefinitely. As a result, each year, over 825 billion dollars of debt remain owed to small businesses worldwide. For many years, Improved Data Services has helped companies and various organizations collect overdue debt quickly and in a professional manner. Today, Improved Data Services’ experienced collections staff will share the most common mistakes businesses make relating to debt collection to help businesses more successfully recover debts.
Not Being Familiar with Debt Collection Rules
Like with any other industry, laws and regulations within debt collection dictate what a business can and cannot do to recover debt. It is a common occurrence that businesses trying to collect debts will unknowingly break these laws and, in doing so, hurt their chances of collection. To avoid fines or further delays with debt collection, businesses should adequately familiarize themselves with debt collection regulations and rules before moving forward with contacting a debtor.
It is all too common for companies to make the mistake of waiting too long to collect a debt. While it is important to give clients an appropriate amount of time to pay back the debt, waiting too long can decrease the likelihood of the debt being recovered. If a company waits for over a year to hire a collections agency to regain the debt, they could pay a higher contingency collection fee as older debts are harder to collect. For these reasons, it is essential that businesses set aside a weekly reminder to send to remind delinquent clients to pay their outstanding debts. If a debt has not had a payment in over 90 days, businesses should expect the debt to go unpaid and take steps to hire a debt collection agency.
Not Knowing How To Approach the Customer
It can be difficult asking a client to pay their outstanding debt, especially when that client has been a longtime customer. Companies will frequently approach these customers with an overly pleasant tone and not stress the necessity of payment. This can allow customers to brush off the debt and not prioritize payment. However, acting too harshly to a customer may offend them, losing any potential for future business. It is important to remember that this is a business transaction and should not be viewed in a personal context. Asking politely but firmly for the debt to be paid is often the best approach.