In-House Debt Collection Considerations 2 of 6

By Dean Kaplan+

These simple steps can improve the collection success of your debt collectors.

Following simple procedures can help to increase your agency’s debt collection success.

When an accounts receivable goes delinquent, the debt collection process must begin. There are several steps to the debt collection process which can increase the odds of success. This is the second article in a six part series about the principles of collecting delinquent debt using in house debt collectors. This article will discuss four steps which can lead to collection success.

When a debt collector begins the collection process, it is critical that the collector be committed to collecting the entire amount owed. When a debt collector approaches a collection with this mindset, the chances of a total collection go way up. When a customer makes purchases on credit, they are obligated to pay for the purchase within the terms of the purchase agreement. The debt collector’s job is to enforce these terms and receive full payment. At the beginning of the collection process, the tone of the collection calls may be conciliatory; however the tone should become progressively more aggressive as time goes on ultimately leading to collection of the total amount due.

As soon as the collection process has begun, it is important for the debt collector to make further contacts following a predetermined systematic schedule. Any time a debtor promises to take a productive step in the collection process, the debt collector should make note of the commitment and schedule a follow-up contact on the exact date the next step was to occur if the commitment was missed. Even for those debtors who are unable to make payments now, systematic follow-up calls should occur. These regular follow-ups will tell the customer that the company is taking the delinquency seriously, and they are still obligated to pay the debt. Making this regular statement to the debtor usually puts the creditor at a collection advantage.

An important step in achieving successful debt collections is simply getting the customer to discuss the past due accounts receivable. Once a conversation has begun, this is usually a good indication that the debt will ultimately be paid. The goal of this dialogue is to get the customer to explain the reason for the delinquency. There are many possible reasons for non payment including a dispute, cash flow problems, or a myriad of other reasons which are unique to that customer’s business situation. During the conversation with the debtor, the debt collector may be able to make adjustments to terms to help ease a cash flow issue, or it may become clear that more aggressive collection tactics are required. Regardless, the customer should leave the conversation with the knowledge that payment is required for products purchased.

Preservation of goodwill with customers is a real goal for most companies with most customers. Even customers who are struggling to make payments today may become excellent customers down the road. A great deal of skill and tact is required of debt collectors to walk the fine line between collecting debt and maintaining good relations. Sometimes hiring an outside commercial collection agency is a way to walk this line. The professional debt collector has the extensive experience in debt collections that enables the skill and tact required to be fine-tuned. In addition, because of the third party status of the professional debt collector, it may be easier to aggressively pursue payment because there is no preexisting relationship between the debt collector and the client.

Click here if you are ready to move on to the next article in this six part series In-House Debt Collection Considerations 3 of 6.

Be sure to check out the other articles in this series:
In-House Debt Collection Considerations

  1. Things to Consider Before Starting Debt Collection
  2. Four Steps to Collection Success
  3. When to Start The Collection Process
  4. Making Contact
  5. Following Up On Collections
  6. Additional Collection Techniques

The Kaplan Group is a boutique collection agency specializing in large (over $10,000) debt collections due from businesses. Founded in 1991, the company has a stellar reputation (A+ rating with the Better Business Bureau) and is recognized as one of the leading collection agencies for results on large and complex matters.