It’s inevitable as a business owner to have people or entities that owe you money. There are strategies you can employ in order to successfully collect debt.
Debt collection has always been painful both for the collector and the debtor. Debt occurs when a particular business or individual is not able to pay due amounts of a particular product or service owed to a company. These items are not sold in retail and usually, the debtor is within a contract of a subscription which means that he is locked in to a particular period where he has to continually utilize that product or service. Such a contract may be enclosed with terms and conditions such as relating to the pre-termination fees and other damages. When a subscriber fails to pay the amount that is due every month, the service provider has the right to stop the subscription basing on the terms set forth in the contract, and informs the subscriber to settle his fees, including pre-termination and attorney’s fees, within a specific period of time. When the debtor becomes unresponsive, then the collector can determine if he wants to sue the debtor in a legal manner. However it will always be difficult to chase people with debts primarily because it is very difficult to dole out a huge amount of money for this purpose. So if you want to collect the remaining amounts from your former subscriber, here are some tips to make it less painful and rightful for both parties.
Debt Collection Strategies That Work
- Be clear when stating facts to your client. Oftentimes, misunderstanding occurs during the first step of the client and the company’s negotiation primarily because the terms and conditions are not explained in full. And when the subscription is cut and the due amount is supposed to be paid, the debtor always has a hard time settling those and his defense would be his unawareness of the stipulation of terms and conditions in the contract. So to prevent this, make sure that your client understands everything.
- Be open to giving your clients various options on how he can settle his debt. Some clients are intimidated by phone calls made by debt collection agencies and the common understanding is that the first call is the initiation to a lawsuit. Have your client understand that apart from the money matter, it is also your goal to settle any misunderstanding between your parties and that your concern is how to make everything favorable for both of you.
- Allow installment payments instead of full ones. The primary reason why customers are so reluctant in paying their debts because it is so huge that it will rip off their entire paycheck. Thus, provide them with the option to settle their debts on an installment basis within a particular schedule and length of time.
- Remove unnecessary fees if this is possible. Other fees such as pre-termination and attorney’s fees can be waived especially if the client is so willing to pay the debt but he is financially incapable of settling the whole amount. Discuss with your collection lawyer as to which fees are reasonable to waive that would not hurt your business.