How to determine your debt collection process?
Debt collection is something that you need to handle carefully. Debts can lead to business failure if it persists for long. On the contrary, improper debt collection procedures can have adverse effects on your brand. The debt collection process ranges from a friendly reminder to repossessing the customer’s assets. You can move from one step to another depending on the reaction of your customer. This article will give you some tips on how to determine your debt collection process. However, you should be aware of the debt collection practices that are banned by the government. You don’t want to find yourself on the wrong side of the law as you try to get your debt back.
• Using a Friendly Reminder to Pay
When the payment is overdue for the first time, give the client a courtesy reminder by sending him a letter, emailing, or phoning. In some instances, the clients will pay once you contact them. The customer may have made a payment in the wrong account, forgotten about the bill, or there could be another minor issue that you can resolve quickly and easily. Include your contact information, banking details, and payment options in the reminder so that it will help the customer to pay easily and quickly. You can get a friendly email reminder template to use in making your request.
• Use an Overdue Payment Reminder to Contact the Customer
If the payment remains to be outstanding and the client misses to pay on the next agreement date, or he fails to contact you, then give them another call. This step also entails sending another reminder letter or email of the outstanding payment reminding him to meet his obligation. You can get an overdue email template to use for your reference at this stage.
• Use a Final Notice to Contact Your Customer
If the customer fails to pay as per the terms of payment and misses the extended payment dates, email or call them to discuss the outstanding debts and request them to clear the arrears. Send them a final notice to pay, and you can use an online template for reference or resource if you don’t have one.
• Try Making Direct Contact with the Customer
If still there is no response or payment, try to visit the customer in person. You can also give him a phone if you were previously using the email to contact them and ask for payment. This action may help in facilitating a personal relationship with the client and may help you with future payments. You can get an online contact script to use for your reference or resource.
• Sending a Formal Demand Letter
If all your attempts to contact the customer and get payments don’t bear fruits, you can now send them a formal demand letter. Remember you only need to undertake this procedure as a last resort. The reason is that it can damage the reputation of your brand. It can hurt the relationship you have established with your customers including the loyal ones.
• Use Debt Collection Services as the Last Resort
If the payments are still pending, you can use the debt collection agencies as a last resort. This procedure can also have adverse effects on your brand in the market. Don’t resort to such actions unless you are dealing with difficult clients and more friendly approaches have failed to bear fruits.