Dealing with a client who does not want to pay up for the services or products that you provided, can be classified as the top five most frustrating things! If you try following the legal means, sometimes it might even end up using more money than the debt itself. A lot of small businesses find themselves having to deal with clients who do not pay on time, can’t be able to repay the full amounts or some of them who just don’t want to pay the debt.
Even though the whole situation is very frustrating, it is very important to follow the right procedure because how you decide to handle such a situation will reflect on the brand of your small business. In most cases, the client who you need to recover the debt from usually fall into either customer who goes long lengths in order to avoid paying up the debt or those who normally pay on time but they are unable to pay because of one reason or another.
When you understand the type of client you want to recover the debt from, it will be easier to deal with him or her. Recovering the bad debts will vary from one client to another. For example, a 290 dollar debt from a customer who always paid his or her debts on time cannot be the same as a 5000 dollars from a new client who you have no idea about his debt payment behaviors. This means there is no universal template of collecting debt from unpaying clients.
Sometimes you will be required to adapt to the situations for effective debt collection. It actually does not matter if the customer is someone who you know personally or just a new client who you are really not so happy about, you have all the rights to ask for your money to be paid back. The following tips will help you approach different situations to ensure maximum bad debt recovery.
It is very normal losing your cool after you have provided a person with excellent services or he has taken products from your business and he doesn’t want to pay up on time and he is not even picking up your calls. But that is not the way to go about it. It is very important that you try to keep it cool because the angrier you will be the lesser your chances of collecting the whole debt. The client in most cases is going to feel the wrath from your voice if it is from a call and he will in most cases not be willing to cooperate because he will take this personally. Handling people can be delicate and you need to handle even the person with your debt carefully to avoid frustrating him and making him avoid paying up the debt.
Treat the call with the client as just another call that you make on a good day. Put a smile on your face as you are speaking to him even if you were irritated by the previous calls. Take a few minutes to keep everything cooled down and then make a call. The tone that you start the conversation with will be exactly the same one that the debtor will respond with. If you are in a good mood it is very likely to receive a good response from the debtor and from there you can negotiate the terms.
Know your rights.
Don’t just jump in debt collection if you have zero training about professional debt collection because you will just be fumbling blindly through the whole process and you might end up collecting nothing or even worse getting sued by the same clients who owe you! Just make sure you familiarize yourself with legal options and you at least you know your rights. The sooner you know about your rights the better you will be when it comes to debt collection.
You will understand the course of action that you can take and it will also help you become more confident when it comes to interacting with the clients who owes you. For example, if you did not know how to get the social security number of a client, learning the legal options will help you understand that you can go through a legal process and you get the social security number.
Make sure that you document.
When it comes to debt collection you have to record everything. This is not an option, it is a necessity. Few times the debt collection will lead you to a court of law trying to recover huge sums of money. Should it ever come to a legal battle, the documentation will help you a big-time win the battle. Document each and every time that you make a call to the client. If possible record the phone calls and take notes from the call.
Make sure you certify each and every letter that you send via email and make sure you save the email too. Every time you visit the client’s office or home, make sure you document those visits. All that information will prove to be helpful when the day comes.
Harassing your clients does not mean that they will pay up. Actually, there is nothing of value that is going to come out of that. Persistence is the key to debt collection. Harassing your clients does not just mean using a debt collection agency which will go extra miles trying to recover the debt. Even calling the client like 30 consecutive days screaming and yelling at him is a form of harassment.
Persistence means calling a client like 5 days a month and allowing him or her some options on how he or she can start repaying the debt. Sometimes you can even settle for less if the client agrees to pay the agreed amount within an agreed time.
Sometimes I wonder, why would anyone borrow money he can’t pay up? Just a small consolation, you should know that you are not alone in this ordeal. Applying for a loan or borrowing money from either a lender like Instant Loan or a bank signifies various things to completely different individuals. Probably the most prevalent factors that those individuals take a loan is simply because they would like to obtain something, they aren’t able to spend cash for.