What Are The Best Debt Collection Strategies?

Whether your business is small or large, customer debt is becoming a reality in almost every modern business. Having a successful debt collection strategy can help you prepare for any debt collection issues in the foreseeable future. It’s important for your business to develop a good debt collection strategy to effectively deal with and respond to delinquent customers, this will ensure the continued growth and success of your business.

While there is no ‘one fits all’ debt collection strategy, these strategies will help you improve your debt collection success:

1. Friendly Payment Reminder

When a payment becomes overdue, you should send a friendly payment reminder to your customer. This could be a friendly text message or an email reminding them that they have missed a payment. There may be a number of reasons your customer missed their payment, they could have simply forgotten the due date, paid the money into the wrong account or ran into some other issues. The friendly payment reminder is important, as it is possible that your customer may have simply just forgotten to make the payment.

2. Follow-up Reminder

If your customer doesn’t respond to the email and has yet to make payment, the next step would be to call your customer and ask for payment. Remind them of the payment due date and ask for payment to be made. Some people need to be asked over the phone for them to initiate a payment. If your customer does not answer your phone calls, then you should send another email reminding them of the debt they owe you and requesting payment from them.

3. Final Notice

If the previous steps haven’t resulted in a payment from your customer, then it’s time to send them a final notice. Your final notice should take place in the form of an email or letter explaining the information relating to their debt. You should also explain your previous attempts to collect payment and remind them of the terms and conditions of your agreement. The final notice will inform them that if they do not make payment immediately, their debt will be handed to a debt collection agency.

4. Formal Letter of Demand

If all attempts to collect payment have been unsuccessful, then you should send a formal letter of demand to your customer. This letter serves as an official warning to inform them that if payment is not made, their debt will be handed over to a debt collection agency.

5. Hire a Debt Collection Agency

If your customer has still failed to settle their debt, then you should consider hiring a professional debt collection agency like Affinity Debt Management. While an agency will charge a small fee for their services, they have the expertise that you may not have. If you are concerned about preserving the relationship with your customers, hiring a debt collection agency will help you keep the collection process at an arm’s-length. 

The professional team at Affinity Debt Management has a proven track record, we are dedicated to providing niche services to all our clients that results in cash flow optimisation from accounts receivables. If you are exploring the possibility of outsourcing your debt collection services, our professional team is ready to assist you. Please feel free to contact us.

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