Debt collection has never been easy for many businesses because they don’t understand how to recover a debt. While it is difficult to ask your customers to pay up their debt, you can easily make mistakes that may make the situation unfavorable. Circumstances like this may cost your business in the long run.
Unfortunately, allowing your unpaid invoices to accumulate puts your business at greater risk in the future. So how can you prevent this from happening? This article highlights five common mistakes debt collectors make.
5 Common Debt Collection Mistakes to Avoid:
Being Extremely Kind or Harsh
As a business owner, you must learn to stay in between the two extremes to avoid giving a wrong perception to your customers. Some debtors are opportunists, and they would capitalize on your kindness to prolong the debt payment. Likewise, some customers may react negatively to your harsh approach. Hence, they abscond with your money.
Surely, you would not be happy if any of these happens. Therefore, the best way you can handle this is to stay in the middle. Show that you understand your customers issues but be consistent and determined at the same time when it comes to collecting on your unpaid invoices.
It is not enough to wait until a debt becomes due before you remind your customers of the deal agreed. If you must assign someone to take up the responsibility of checkups, you should. It helps avoid forgetfulness on the part of the client. Be conversant about all the information concerning the services, including dates and agreed rates.
From time to time, engage your debtors in a friendly manner, informing them about the services that require payment or past due. Your consistency keeps you in mind of the clients, which will induce them to pay up soon.
Failure to Define your Credit Policy
Many business owners fail to define their credit policy, and it has been the reason for the liquidation of many firms. Credit policy is as important as anything, and all debtors must be aware of it to avoid issues in the future. There should be due dates, collection dates, and amounts in your collection policy, including fines for overdue payment.
When clients see the implication of not paying at the right time, they try as much as possible not to fall victim to harsh circumstances. Provide detailed information about your credit policy, and it must be followed strictly irrespective of the customer’s status.
Pestering the Customer
At that point where a customer is yet to settle his debt, do not harass them. Harassment may complicate the issue. It could go as far as damaging your relationship with the client. Also, a client may delay the payment purposely because of your action.
Therefore, avoid pestering the clients by not using vulgar words or calling repeatedly. It has never been a good option to threaten a customer. Understand the debt collection rules and abide by them.
Not Being Consistent with Customers
Everybody likes transparency. If you convinced your customer that you would do something, never fail to fulfill that obligation. Be transparent with the agreement and everything surrounding the deal. If you agree to a payment plan, honor it. Being consistent, transparent, and reliable encourages customers to reciprocate the same qualities to you.
Once you begin to avoid these debt collection mistakes, your business will stop losing money to debtors. If you actively practice some of the tips provided in this article, dealing with debtors will not end badly for your business.
Why Choose AWA for Your Transportation Collection Needs?
AWA operates on a contingency fee basis, meaning, if we cannot collect, you owe us nothing. If you have unpaid freight invoices and are not sure what to do next, call 662-892-8591 to speak with one of AWA’s client specialists today or Place a Direct Claim Today
For more information on our agency practices and methods, view our AWA Collection Process Page.
1 thought on “The Most Common Debt Collection Mistakes To Avoid”
It was really interesting when you talked about how debt collection has never been easy for businesses. I would think that many businesses don’t know what the best way to go about collecting debt from customers is. It seems like it would be a good idea for a business to work with a collection agency in this situation.