A Game Plan for Effective Debt Collection
Debt collection is an essential aspect of a business. Effective debt collection is necessary to obtain additional funds for the company. However, it is a tricky problem that your organization must meet head-on. With a lot of hostility surrounding the subject of debt collection, it poses a ton of challenges to businesses. Recovering money from clients is an issue that demands a systematic game plan and cautious execution.
Effective debt collection is the best way to keep outstanding payments to a minimum. However, you must also be aware that there will always be people who will not pay on time. Worse, there will be customers who will try and hide from you. If this happens, you will need to find them because it is impossible to collect from someone you cannot reach.
How? Through Skip Tracing.
What is Skip Trace?
To skip trace is to collect information about hard-to-locate people so you can have a way to reach or contact them. The term is a combination of the words “skip” or someone leaving town and “trace” or to track someone down. A skip trace usually finds simple information such as a location and contact details, including a phone number, email address, or both.
Searchbug has a skip tracing tool for finding the whereabouts of someone who is hard to find. The Professional Skip Trace tool can help you in ways that basic online searches fail to do so. In-depth professional research can help you find someone who is a delinquent debtor, so you can repossess their properties or serve a summons. The services offered range from instant online searches, a basic assisted people search, all the way to a verified current address, which you can also bundle with a verified employment search.
You should give it a try if you need to locate a debtor. Don’t worry because you are eligible for a refund if no information is found.
Need to skip trace often? No problem. You can use the Skip Trace API. It will allow you to add Searchbug capabilities to your website, mobile app, intranet, or other internal systems. Integrate data obtained from published phone directories, public records, criminal record repositories, and restricted skip trace databases. With Searchbug’s quick and reliable APIs, software developers can create practical applications for locating debtors on mobile apps and websites.
If you need the most accurate and up-to-date personal contact information of a debtor, use the API People Trace tool. This tool can search our multi-data stream using SSN. It is beneficial for finding personal contact information, which typically includes names, aliases, current address, previous addresses, and phone numbers associated with the SSN. It is the most accurate of all our people search API tools.
The API People Trace tool costs $1.97 per query.
How to Keep Debts to a Minimum?
To keep debts to a minimum, you need to look at the situation before the debt is made, if ever possible. By doing this, you can identify who the potential bad debtors are from the get-go. From there, you can create a plan of action that helps you avoid incurring debt from these types of individuals.
However, identifying potentially bad debtors from the start is easier said than done. It will require having information about their history to set up a system that flags these bad debtors. A sort of “bad debtor profile”, if you will. If you have such a system in place that can immediately identify a bad debtor, you can preempt the bad debt but not get involved with such individuals. If you have already provided them a product, service, or money, you can act immediately, increasing your chances of getting paid.
You should note that the longer you wait to take action, the less likely you are to recover your money. A smart debt collection strategy involves wise judgment. Of course, you would not want to make a move that will annoy important clients, but you would also not want to be taken advantage of by bad debtors.
What Are the Important Factors to Successful Debt Collection?
To ensure successful debt collection, you need to have an effective game plan. It should be efficient such that it maximizes profit and minimizes cost. Moreover, you need to improve your game plan continuously as more technologies come to light. It will help you keep a secure, legal, and long-term outlook toward collections.
Integrate the following into your debt collection game plan to ensure its success.
1. Make the payment process easy.
If the payment process is easy, the debtor is more likely and willing to pay. Use technologies such as smartphones and apps to make the payment process effortless. Consider accepting app-based or web-based payments so that the debtor can send you the money with just a few taps or clicks. Implement self-service portals such as online payment apps and automated phone calls that promote secure and straightforward collections.
2. Automate your debt collection process.
There are tons of technologies around that will let you take the human element out of the debt collection process—making it more convenient for you and the debtor. By doing this, you can reduce collection costs and see consistent results. Automate the communication between you and the debtor to allow quick payments and instant reminders through text or email. As a result, it will improve the overall customer experience. Often, people ignore phone calls from unknown numbers, so you should reconsider using outdated methods of contacting your debtors.
3. Use analytics to help you identify bad debtors.
Have an analytics system that can help you avoid bad debtors and have a hard time collecting. Analytics provide you with information that can help you evaluate a client’s receivables, whether they are monthly, quarterly or due in full on invoice receipt. With this information, you can identify patterns that can help you decide from the start if a client is a bad debtor or not. You can save yourself from difficult collections and protect them from experiencing unwarranted risks. Analytics can help you monitor client payments and flag you regarding late payments, whether habitual or not. Therefore, you can get ahead of the problem before it costs your business.
4. Employ a centralized debt collection system.
You can significantly improve your debt collection game plan by implementing a centralized collection system. Use an application that puts everything in one place that all collections staff can view whenever necessary. A centralized debt collection system can trigger dialers and remind collectors to work on or review an account. An adequately set up debt collection system can spell success to your debt collection game plan.
Why Are There Late Payments (and What to Do Next)?
Late payments are inevitable when it comes to debt collection. Moreover, never expect a debtor to reach out to you first. Have the initiative to take the first step of recovering money from clients. However, you might need to be a little flexible to a debtor if you have a good history with them, especially if they are paying late because:
– they never received the products they purchased
– they never got the bill
– they have a problem with the quality of the products that they received
– your invoice did not meet their requirements
– your invoice was not clear
– they have a problem with your invoice
– they experienced a glitch in their payment system
– they have a problem with their finances
If there are late payments due to any of the reasons described above, make sure to address the concerns so you can collect. Begin with a polite reminder of the debt because an outstanding payment may not necessarily be the client’s fault. Follow up when needed. Keep in mind that often the money is in the follow-up.
Try the following techniques when it comes to debt collection.
1. Emailing your client is the most straightforward and least confrontational technique you can use to reach out to a debtor. However, it is also the easiest to ignore or avoid. You might not get promising results via email, but it can be a good start.
2. Call your debtor – a quick call is a simple way to remind a client about an outstanding payment. However, they can ignore your call, especially if it comes from an unknown number.
3. Visit your debtor in person – if the first two techniques did not work, your debt collection might require a face-to-face meeting with your debtor. It can often solve the problem and help you collect quickly. It also allows you to understand your client’s current situation that prevents them from paying you. If they cannot pay immediately, a personal visit will allow you to work on a payment plan acceptable to both parties.
To get paid, you need to be prompt and persistent. Be open to the possibility that one call or email can be fruitless. Even a single visit might not get you the results that you like. However, persistent follow-ups can increase the chances of collecting. If the client realizes you will not give up easily, they might prioritize your debt collection.
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