Business & Finance

4 Effective Debt Collection Strategies for Businesses

Customers do not always pay their debts. When business owners encounter such individuals it’s important that they know how to act. Making the wrong moves can ruin their chances of reclaiming monies owed to them. Getting money back from debtors is easy when you know what you are doing.

Learning, researching, and studying debt collection strategies will help your business to deal with unwilling debtors more effectively. Not educating yourself will inevitably lead to failure.

Here are four effective and legal debt collection strategies you can use.


Outsourcing Collection

One of the easiest ways of collecting monies owed is to outsource collection to a specialist agency. The people behind Oddcoll say that collecting money can be frustrating, so it’s better to leave the collection to people who know what they are doing. It will probably be very difficult for you to find the time to collect money and keep your business running smoothly. Before outsourcing, make sure that you research the company you’re planning on working with, just so you can be sure they collect money legally and ethically.

Credit Reporting

A simple way of getting debtors to honor their debts is to report them to the credit bureau. In the United States, a default can mark an individual’s credit score for up to six years. During this six-year period, the debtor will be unable to borrow money, take out credit cards, or get any kind of finance. Notifying debtors of your intention to report them to the credit bureau could be all it takes to rouse them into action and motivate them to repay you the money that is owed. Follow through and take immediate action if threats are ignored.

Frequent Letters

Throughout the debt collection process, letters must be sent on a weekly basis. Experts say that each letter should increase in severity, i.e., the threats need to become more serious. However, you do need to avoid directly threatening people as this can get you into a lot of trouble. Instead, threaten things like credit defaults, explored in the paragraph above. You do need to follow up on your threats, too. Never send threats that you have no intention of following up on. If you do not follow up on them, debtors will not take you seriously.

Cold Calling

Depending on the amount of money that is owed to your business, you might want to enlist a team of bailiffs and employ them to cold call. Cold calling involves arriving at a debtor’s house unexpectedly and asking them to make repayments on monies owed. Depending on where you live the bailiffs you instruct and hire could actually force entry into debtors’ houses. Finding a bailiff to work with can be difficult, however. It is therefore much easier to work with a debt collection agency. Most debt collection agencies have bailiff firms they have exclusive contracts with, offering better rates.

There are ways of recovering debt if a person or company owes your business money and won’t pay. The action you take will depend on the amount of money that you are owed and the ability of the debtor to pay. You can outsource collection, report to the credit bureau, send letters and emails, and hire a bailiff to attend to the debtor’s address.