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Improved Data Services Discusses the Most Common Mistakes Businesses Make When Trying to Collect Debt

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.

Procrastinating

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.

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Improved Data Services Explores How Debtors Can Properly Manage Payments

Improved Data Services acknowledges that it is, financially, a challenging time for many of us as we deal with the financial realities of the COVID-19 public health crisis. While we are all aware of the impact the virus has had, industries continue to soldier on and need to operate despite difficulties. For debtors, this means that the possibility of paying down debts as soon as possible ahead of complications is seeming like an even more attractive proposition as time goes on. Improved Data Services recognizes that this can appear as a daunting task to those already contending with their other expenses and, here, discusses a couple ways that individuals can pay down their debts easier.

One of the easiest ways that an individual can pay down their debts is by drawing up a plan. While it sounds simple, many debtors do not acknowledge exactly how far a well-structured plan will go towards paying statements. For planning, always consider you monthly income and bills that are accrued over the course of the month. Chronicling your normal behavior is an instrumental facet of the plan, as it can help highlight areas where you are spending more money than you need to. After getting a wholistic idea of your spending, isolate areas where you can afford to temporarily cut out or lower expenses. This, of course, will probably not include expenses such as rent, utilities, or child expenses but could include unused memberships, certain entertainment expenses, or hobby items. The plan should also include how long you believe it will take to pay off debt and can be drawn up for multiple scenarios This sometimes draws people to pay debts more quickly because, if they notice that they can pay with just a few temporary cuts, they will likely do so. After all, expenses that seem manageable are the ones that get paid.

Improved Data Services recognizes that part of making debts manageable can include collaboration with entities that you owe debt to. Debtors often fear communication with lenders and businesses but avoiding conversation can often just mean that debts will spiral out of control. Instead, Improved Data Services believes it is a great plan of action to be proactive about debt. If you truly cannot afford the plan that is in place, explaining the situation and examining the possibility of drawing up a new one shows a commitment to payment that many appreciate. Entities will often try to work with an individual to receive payments on a balance, but they are much more likely to establish a fond rapport with a debtor that tries to remain cordial and pay when they can.

Improved Data Services knows that there are plenty of ways to broach paying down debts, but the most important thing to do is keep a clear head and try to make payments as reasonable as possible for everyone involved. The second that you begin to overstress about what is owed, fight or flight kicks in and you will often end up acting in ways that do not serve to help the situation. As with many things in life, planning and making an effort are huge steps in the right direction.

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Evaluating the Services of a Debt Recovery Agency

Over the course of a client-based business’s existence, it is exceedingly likely that they will need consult a debt recovery agency to collect overdue payments for services rendered. Improved Data Services recognizes, however, that many businesses do not know what exactly to look for when comparing agencies to find the best fit for them. Debt recovery can be a complex space, and there are multiple facets that contribute to making certain agencies stand out amongst the crowd. Here, Improved Data Services discusses a few surefire ways to evaluate the performance of an agency before making your choice to continue with their services.

Recovery Rate and Time

Companies are frequently interested in recovery rate and time a metric to evaluate the performance of debt recovery agencies, and for a good reason. Improved Data Services notes that a good way to get a wholistic idea of this KPI is to inquire about the agency’s recovery rate and the percentage of outstanding debts that they have been able to collect on. Recovery time is equally important as a KPI for debt recovery agencies. Many high performing debt recovery agencies will keep detailed reports on how long cases given to them are open and how long, on average, it takes to resolve outstanding debts. Reporting like this makes it easier to evaluate performance and leaves room to understand why some cases have taken longer to collect on than others. Sometimes, it can be a matter of what type of debt and how much information the agency was provided on the debtor to aid in their collection.

Quality of Working Relationship

One of the most relevant qualitative factors for companies to judge debt recovery agencies on is also the most simple- how they make you feel about the partnership. Improved Data Services recognizes that debt recovery agencies that truly deserve your business will consistently make you feel at ease with your working relationship. This includes qualities such as transparency throughout the process and showing the utmost respect to staff and debtors alike. The best agencies in the space will even make the process clear and understandable for individuals not particularly educated on the complexities of the industry. They will also have no problem accommodating simple adjustments to services if requested. In an industry as complex and prone to obstacles as debt recovery, the ability to be flexible and provide quality customer service during the process tends to be what separates top performing agencies from their competition.

How The Agency Approaches Fees

Related to the quality of the working relationship, how the agency approaches collection fees is an important marker for the trustworthiness and your personal satisfaction with services rendered. Some agencies are not totally upfront about collection fees, and any fees that were not outlined before the establishment of the partnership should be evaluated and questioned. Improved Data Services acknowledges that trustworthy debt recovery agencies will have no problem with discussing their fees and explaining them upon request.

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Improved Data Services Discusses Tips for Hiring a Debt Collection Agency

The need for debt recovery in business is almost universal, as even the most successful companies can occasionally have difficulty collecting payments from individuals that are determined to not pay. In these types of situations, it is recommended that companies hire a professional debt management or debt recovery agency that can handle outreach and utilize a streamlined approach for receiving payment from delinquent accounts. Even with the knowledge of these services and the distinct need for them, the act of comparing agencies can be difficult for companies looking for the best fit. Improved Data Services realizes that hiring a debt recovery agency can appear as a daunting task for individuals that are not sure of the specifics of the space and offers a couple tips to assist those considering consulting a professional.

Improved Data Services realizes there is truly no substitute for proper research when hiring a debt recovery agency. Keep in mind that debt collection agencies often specialize in a certain area of the field, and it is always a good decision to look for an agency that has worked for and collected debts within the space that your company works within. For example, some agencies focus more on collecting from large agencies while some specialize in collecting on behalf of small and home-businesses.

Depending on your industry, there could also be multiple levels of industry specific regulations that a debt collection agency would need experience with in order to properly and legally collect. The healthcare industry is an example of a space that may require specialized knowledge in order to collect for, and it is important for such industries to ensure that a debt collector is a good fit given their parameters. Improved Data Services acknowledges that the research phase of the process is also the best time to check specifics of the debt collection processes utilized by the agencies that you are comparing as well as their credentials. Don’t be too hesitant to make sure that a collector is licensed, bonded, and insured while you are considering them.

After narrowing it down from to a few agencies that you may want to do business with, compare costs to see which price points would be the best fit for you. Improved Data Services notes that this is also a great time to evaluate the payment structures of the collectors you are considering hiring. For example, some debt collectors are paid a flat fee, while some use a contingency. This means that they may not accept a fee if they are not successful with collection but will charge a certain percentage of the total collection when payment is collected that is dependent on the work involved.

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Improved Data Services Helps Small Business Owners Avoid These Common Mistakes

Improved Data Services often works with small business owners to fulfill or improve upon their debt collection process. Businesses that do not have a strong debt collection process in place can cost themselves valuable time, energy and resources. Today, Improved Data Services has compiled some of the biggest mistakes small businesses make in their debt collection process and what can be done to remedy them.

The first mistake made by small businesses is working without the safety net of a signed contracts. It is important to have contracts in place to protect the business and the customers. Clear and transparent paperwork ensures both parties are responsible to honor their obligations. In addition to protecting interests, it will also help settle any dispute that arises. It’s much easier to recuperate unclaimed fees when the client is contractually obligated to pay.

Another common mistake is not understanding the nuances between an outstanding payment from another business as opposed to an individual. There are different laws in place depending on the type of party who owes. This can make a world of difference in determining the best approach to collecting a debt. In addition to understanding these differences, a business should also do their research before taking on a client. Research upfront can help protect a company’s interests. Taking the time to do some basic research and collect some essential data can help ensure that a business is starting a relationship with a reputable source.

The biggest mistake a small business makes is putting the responsibility of debt collection into the wrong hands. Handling receivables correctly is the lifeblood of any business. Debt collection is often a task that owners try to take on themselves. Unfortunately, time is a requirement in this endeavor, which is something most CEO’s severely lack. Great leadership recognizes that they do not have the time to give the attention to debt collection that it requires. The choice then becomes hiring a partner or designating an employee to this task.

Finally, some small business owners decide to go the legal route with all their debt collection needs. This can prove to be incredibly costly. If a lawyer is successful, legal fees can still come back that all but wipe away any funds that were recuperated. Improved Data Services understands how to form relationships with people and businesses. Their team gets to know the issues at hand and does everything it takes to collect the debt in the best way possible for all involved parties.