4 Tricks to Achieve Results with Your Debt Recovery
Debt recovery is a necessary part of any business. Yet, it’s also a difficult part of business. With more than 30 years of experience, Clients ARM understands the debt collections process. If you’re not getting results with your debt recovery efforts, use some of these tricks.
Be Prepared from Day One of the Client Relationship
We’re firm believers that most people don’t set out at the start of a relationship to simply not pay. Life happens to them. They lose a job. They have an emergency. Financial hardships are part of life for individuals and for businesses. This is why it is important to be prepared to collect from day one of the client relationship.
Make sure that you have an appropriate credit policy. Keeping clients at a credit limit that enables them to afford their payments is one way that you can be prepared. This can stop well-meaning clients from taking on more debt than they can handle.
You should also ensure that you have a signed agreement that obligates your client to pay. If you regularly contract with businesses to provide a service, make sure that you try to get a personal guaranty signature. Sometimes a business can be formed in a legal fashion that eliminates personal liability for business debts. So, unless you get a personal guaranty, if their business fails, you may not get paid.
Debt Recovery Is About Providing Solutions
What would you consider a better prospect: not getting paid at all or taking a settlement? What about lowering their payment amount? Debt recovery is about providing solutions to your clients. Many businesses make the mistake of going into the debt collections process with their guns blazing. The issue with this approach is that it makes your clients shut down. It gives them an excuse to not pay despite owing the money. It may push them to file bankruptcy (which means you likely won’t get paid at all). It can also cause your business to suffer from a damaged reputation. Happy clients tell one or two people. Unhappy clients tell everyone…and that’s much easier now with social media. You could find yourself with a very big problem on your hands.
Approach debt recovery in a way that shows your clients that you care and that you want to help them. What can you do to help them get their outstanding debt paid? Can you negotiate a settlement? Some money is better than none especially if you want to pursue financing. Banks can and do look at your past due accounts.
If you and the past due client come up with a payment arrangement, send it out in writing as confirmation and make follow-up calls to remind them when a payment is due. Your role as a service provider hasn’t changed. You’re still there to provide solutions.
Understand the Laws Involved
Debt recovery is subject to federal and state laws. You must understand what you can and cannot say to a debtor under the law. You cannot threaten a debtor. You cannot abuse a debtor. You cannot harass a debtor. You must know the proper times to call. If the debtor says that you cannot call them, you must not call them. Another important consideration involved includes the fact that you cannot tell them you are going to sue them unless you plan to actually file suit.
Hire a Professional
Debt recovery can be done by business owners, but it is often more cost-efficient to hire a professional. Clients ARM provides both first and third party collections for small businesses. With first party collections, Clients ARM acts as an extension of your business. This means that when we call on your behalf, we introduce ourselves as a representative of your business. In debt collections, past due account holders are more likely to speak with the business they owe money to than a debt collector.
With third party collections, we call as a licensed debt collector. Clients ARM is licensed in several states. However, we still use the same care, respect, and old fashioned customer service principles that you would expect and that your clients deserve.
Clients ARM has a collections rate that is higher than 90%. We provide debt recovery on a contingency fee basis. This means that we keep a portion of what we recover. To learn more about how our debt recovery service can help you, schedule your free consultation. You’ll be glad that you did!