Debt collection and recovery is a common occurrence in almost every business and is part of business dynamics. With the tough economy today, clients may have issues paying their debt. Some hire a collection agency to help get some or all of the outstanding debts whilst others prefer a lawyer. If the debt is large and there is likely to be a dispute be sure to get a debt recovery lawyer involved. Read on to know several tips for effective debt collection.
Prepare in advance
Every debt collector must mentally and otherwise prepare himself/herself for each collection call. It is good to research the customer and the business that they run so you are armed with information. This will enable you to plan your call and subsequent strategy. Without preparation, you may end up failing to make an impression on your client and debtor. Often the exercise is facilitated with software that sets out the principal debt, the interest owing and the payment history.
Set up a debt recovery Plan
Debt Collectors must establish a debt collection plan. It is important to know when there is a breach of contract and when to start negotiating for payment and when to just listen. This will enable you to know your chances of recovering a debt and when/how it may be necessary to be firm with the debtor. Working without a plan is a sure recipe for failure.
Analyze the debtor
You should take your time to scrutinize every debtor. This is important because you will be dealing with different people who have varying expectations and debt paying abilities. When you understand the debtor, you will have a better chance to know how to make him/her clear his/her debt as agreed under the contract.
Put everything in writing
When talking to your debtor regarding their debt, it is important to keep everything in writing. Every crucial detail of the discussion and the comments of the clients should be noted down. This will be crucial in the long run, especially if you have any disputes in the future or want to sue for breach of contract. It is best to document everything before you forget. Ensure that you always update your details on the file with every conversation that you have with your debtor.
Keep constant communication
It is good for you to keep communicating with the debtor even if they cannot pay their debt immediately. Talking to him/her or listening can enable you to figure out what he/she is up to. It can also give you a chance to help him come up with a strategy of clearing their loan sooner.
Infuse a sense of urgency
As a debt collector, you must instill urgency to pay the debt. This can only happen when you understand your client and what is crucial for them. A clear understanding of the debtor will give you power to make him/her pay up their loan. You can often use such information to motivate the debtor to clear up their loans.
Give realistic options. If your debtor is unable to make a one off payment, you can advise him/her to make smaller manageable payments over time. Ensure that you come up with a payment plan that suits you and the debtor. Your, main objective is to make the debtor pay off the entire debt within as short a period of time as possible. Take the time to listen and analyze the situation and offer a workable solution for Debt Collection and Recovery.