The most successful businesses are those that implement effective debt collection strategies. This helps them to ensure that accounts are being paid and outstanding debts are being brought in, which in turn increases the cash flow coming into the business.
This is especially important because of today's sluggish economy and recession to examine and monitor your debt collection strategies and make sure they are performing and having the desired effect.
Outside debt collection agencies are experienced professionals and they implement proven strategies that reap effective results from delinquent debtors. Here are some of the tactics they use:
Reminder Letter
Sending a politely worded reminder letter to an overdue account holder can prove to be a very effective debt collection strategy. You may find that some customers may simply have misplaced their original bill, or the due date has slipped their minds. We all experience these types of oversights from time to time. Mailing a simple letter can remind them and you should find that many accounts holders will send in payment promptly soon after.
Reminder Telephone Calls
Calling a customer to remind them of their delinquent account can sometimes prove effective as well. However, if you make the call yourself, you should be aware that some customers have little interest in your business or your cash flow. As many of these customers already know they're delinquent, some may not respond nicely when you call asking for money. If you're prepared to deal with this, then you can do so. It's important to remain focused on the task at hand: getting at the problem why the account remains unpaid, when to expect payment, and/or possibly offer payment arrangements.
Some debtors can feel that money owed to your business becomes less important after they've received the goods or services from you. Third party collection agencies can interrupt this kind of thinking, if they call on your behalf. Hearing from a neutral third party can have a great psychological impact on your delinquent customer and make them see the seriousness of the situation.
Collection Agency Demand Letters
There are some customers who will continue to ignore your repeated reminders and invoices. In these instances, it may be time to employ outside debt collection agencies who can issue firmer, more stern demand letters. Again, the third party impact can be a powerful incentive for customers to respond.
As many customers are concerned and care about damaging their good credit, these debtors will think differently after being contacted by a third party agency. This is often enough to prompt them into action.
Employing Skip Tracing As A Tool
Because we live in a very mobile society, some of your delinquent customers may have changed jobs, moved to another city, or changed other contact information. These customers become very difficult for your business to try to locate.
Collection agencies have an arsenal of resources, software, tools, databases and other options at their disposal that make them far more efficient and effective at finding otherwise unreachable delinquent customers.
Employing Other Legal Options
If you find you've exhausted all the tactics in your current debt collections strategies, don't feel as though you need to write that debt off just yet. There's still hope of receiving the cash your business needs. You still have the option of using third party collection agencies that are able to pursue the case legally.
This is especially important because of today's sluggish economy and recession to examine and monitor your debt collection strategies and make sure they are performing and having the desired effect.
Outside debt collection agencies are experienced professionals and they implement proven strategies that reap effective results from delinquent debtors. Here are some of the tactics they use:
Reminder Letter
Sending a politely worded reminder letter to an overdue account holder can prove to be a very effective debt collection strategy. You may find that some customers may simply have misplaced their original bill, or the due date has slipped their minds. We all experience these types of oversights from time to time. Mailing a simple letter can remind them and you should find that many accounts holders will send in payment promptly soon after.
Reminder Telephone Calls
Calling a customer to remind them of their delinquent account can sometimes prove effective as well. However, if you make the call yourself, you should be aware that some customers have little interest in your business or your cash flow. As many of these customers already know they're delinquent, some may not respond nicely when you call asking for money. If you're prepared to deal with this, then you can do so. It's important to remain focused on the task at hand: getting at the problem why the account remains unpaid, when to expect payment, and/or possibly offer payment arrangements.
Some debtors can feel that money owed to your business becomes less important after they've received the goods or services from you. Third party collection agencies can interrupt this kind of thinking, if they call on your behalf. Hearing from a neutral third party can have a great psychological impact on your delinquent customer and make them see the seriousness of the situation.
Collection Agency Demand Letters
There are some customers who will continue to ignore your repeated reminders and invoices. In these instances, it may be time to employ outside debt collection agencies who can issue firmer, more stern demand letters. Again, the third party impact can be a powerful incentive for customers to respond.
As many customers are concerned and care about damaging their good credit, these debtors will think differently after being contacted by a third party agency. This is often enough to prompt them into action.
Employing Skip Tracing As A Tool
Because we live in a very mobile society, some of your delinquent customers may have changed jobs, moved to another city, or changed other contact information. These customers become very difficult for your business to try to locate.
Collection agencies have an arsenal of resources, software, tools, databases and other options at their disposal that make them far more efficient and effective at finding otherwise unreachable delinquent customers.
Employing Other Legal Options
If you find you've exhausted all the tactics in your current debt collections strategies, don't feel as though you need to write that debt off just yet. There's still hope of receiving the cash your business needs. You still have the option of using third party collection agencies that are able to pursue the case legally.
About the Author:
Kevin Smythe has been a prominent business authority, business advisor along with author about commercial debt collection options for thirty years. He provides additional essential advice and knowledge on commercial debt recovery.
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