Every business has its share of late paying and non-paying customers. Bad debt is a problem for businesses of all sizes. If you are considering dealing with non-paying customers yourself, think again. It may make sense to hire a collection agency instead. They are experts in debt collection strategies and legal etiquette, so you can leave the task to them with confidence.
Collection agencies decide the means of debt collection according to the type of debtor. Some debtors don’t need much persuasion while others do. For many debtors, just receiving a letter from a collection agency is enough to get them to pay their bills. However, some difficult debtors will do anything to avoid paying off the debt.
Handling difficult debtors requires patience, skill, and perseverance. Difficult debtors can be easily identified by their attitude. They may claim that they do not owe the creditor money and try to get out of the situation. If they acknowledge the debt, they will make every excuse under heaven to convince him of their financial difficulties and his inability to pay.
Here are some tips on how to handle difficult debtors:
Contact the right person
Make sure you are talking to the right person at the debtor’s company. Don’t let the debtor refer you to other people to get involved in a fruitless merry-go-round.
Be strong
Make it clear that you expect payment for the products or services the debtor has purchased from you. You have fulfilled your part of the contract by providing the services and goods and you have every right to expect payment for it.
To be professional
Although communicating with difficult debtors can be upsetting, as a professional you must remain calm at all times. You must be patient and firm. Adopting a professional and impersonal attitude helps. Do not shout, do not even raise your voice, mistreat or threaten the debtor, for any reason.
be focused
The debtor may try to distract you from the problem by discussing personal stories and making countless excuses. He must keep a tight rein on the conversation at all times and steer it back to the purpose of the meeting: to collect payment or obtain a commitment to pay.
Ask questions
Question the debtor about the excuses given for not paying the debt. Asking too many questions forces the debtor to find credible answers, and in the barrage of stories, the truth can slip away. The debtor generally expects the lies to be accepted without question. Persistent questioning makes debtors uncomfortable as they have to keep making up more lies to back up their excuses. Avoiding repeat interrogation encourages debtors to settle the payment.
Report debtor to credit rating agencies
Sometimes none of the above measures will show results. This happens when the debtor is exceptionally stubborn. Inform debtors that you are required to report them to a major credit rating agency. Reporting debtors to credit rating agencies will hurt their chances of getting credit for up to 7 years. Sometimes the threat works and the debtor can pay. Otherwise, you must follow the warning with action and report the debtor to the credit bureau.
Litigation
Litigation is the last resort. Advise debtors of your intention to file suit against them. If they don’t heed the warning and pay up, be sure to comply and file a lawsuit. This will make the debtor take collection attempts seriously and will strengthen the debtor’s credibility.
Collecting debts from difficult debtors is an unpleasant and arduous task. However, it must be done. Patience, focus, persistence, and professionalism are required to handle these debtors. Warnings should always be followed by action to ensure that the debtor takes collection proceedings seriously and pays off the debt.