The most successful businesses are those that use effective debt collection strategies. This lets them know that bills are being paid and delinquent debts are being satisfied. This improves cash flow for the business.
While it’s a good idea at any time, it’s especially important during tough financial times to review your debt collection strategies and make sure they’re really having the effect you want.
Third party debt collection agencies are professionals and use proven tactics that produce effective results from overdue debtors. Here are some of the strategies they use:
reminder letter
Reminders to overdue clients that are carefully worded are often a very successful debt collection strategy. Some customers may have simply forgotten their overdue bill or misplaced it. It can and does happen to all of us. A simple reminder letter can jog their memories, and many will pay on time.
Reminder phone calls
Taking a few minutes out of your day to call a customer with an overdue account can also be effective in reminding them of their payment obligation. While it’s possible to make the call yourself, you should be aware that some customers have very little regard for your business, your cash flow, or you. It’s also important to remember that not all customers react well when asked for money. If you’re sure you have the strength to stand up to a barrage of abuse from some angry customers, then make the call with confidence.
Psychologically there are many customers who believe they have received the goods or services they wanted and the bill can wait until their own personal finances are in better order. This way of thinking can be completely reversed by involving debt collection agencies to make the call for you. People are alarmed when contacted by a third party and instantly believe that their overdue account is much more serious than they initially thought.
Collection Agency Demand Letter
There are some customers who will continue to ignore your repeated reminders and bills. In these cases, it may be time to employ outside debt collection agencies that can issue stronger and more severe demand letters. Again, the impact of third parties can be a powerful incentive for customers to respond.
As many clients are concerned and concerned about damaging their good credit, these debtors will think differently after being contacted by a third party agency. This is often enough to propel them into action.
Using Skip Tracing as a Tool
Because we live in a highly mobile society, some of your delinquent clients may have changed jobs, moved to another city, or changed other contact information. These customers become very difficult for your business to locate.
Collection agencies have an arsenal of resources, software, tools, databases, and other options at their disposal that make them much more efficient and effective at finding otherwise unreachable delinquent customers.
Employment of other legal options
After you’ve exhausted all of your debt collection options and strategies, you don’t have to “throw in the towel” or write off the debt…not yet. Collection agencies generally have access to other legal options, including attorneys. If deemed necessary, some delinquency cases can be legally prosecuted.