Do It Yourself Debt Collection

Pros and Cons of DIY Recovery vs Using a Debt Collecting Agency

Sep 17, 2009 Fleur Hupston

Bad debt recovery agencies can add to the costs of a floundering business. Armed with the correct knowledge, debt can be successfully recovered the Do It Yourself route.

One of the more unpleasant aspects of running a small business or a e-commerce business is the prospect of trying to recover bad debt. Overdue accounts can cripple a small business.

Many people resort to employing a debt collection agency to act on their behalf in order to recover overdue payments. These agencies recover debt by sending letters to debtors, following up via phone calls and e-mails and may report the defaulter to the credit bureau.

Some individuals, however, would prefer to recover the debt themselves and there are several ways of going about doing this.

Do It Yourself Debt Collection Tips

Debt collecting is going to take energy and patience. It will also take time away from the core business, so it is best to set aside a certain amount of time each day to make calls or send out letters and no more.

Be organized: A haphazard approach is going to be ineffective. Have all the facts and history of the debt together. Keep a record of every phone call or e-mail made, including dates, times and details of the conversation. Research the guidelines of the Fair Debt Collection Practices Act (also known as FDCPA) and adhere strictly to these guidelines.

Be professional: Do not threaten, use hostile or aggressive language or harass the debtor. Trying to recover debt is not against the law but harassment, threats, intimidation and demeaning language is.

Give the debtor the benefit of the doubt: There may be a good reason for non-payment or a misunderstanding on the part of the client, especially those who have been prompt payers in the past.

Persist: If a client says the payment will be made on Tuesday, follow up that day or the next day. This lets them know that you can't be put off that easily and may speed up the payment process.

Personal visits: If debtors ignore all letters, calls and e-mails but their offices are within striking distance, try paying them a personal visit. Arrive unannounced and remain professional, calm and friendly and this may be enough to encourage them to pay on the spot.

Negotiate: If the indebted person is willing to pay but struggling with debt problems, offer to negotiate terms of payment with him or her. If possible, get him or her to arrange to pay a certain amount each month.

Legal action: For small debts this may be impractical. Involving a lawyer is going to be expensive and the process is time consuming. For larger debts, this may be a viable option.

Debt Collection Software

For a self-employed individual or small business, purchasing a debt collection software program is likely to be a very helpful debt recovery tool. Although there are a variety of these software programs on the market and they all have different features, most are designed to help the business owner to be organized.

Typically, debt collection software works by tracking calls, e-mails and letters made to the debtor. If the client ignores all efforts at recovery, legal action can be taken, in which case there will be a record of all contact with him or her to prove that was contact was made multiple times. Most debt collection software programs offer data entry programs that are used to keep track of when a client was contacted.

There are also other debt collection software programs that will record all or a portion of a phone call. The software programs that have this feature often make the call easily accessible by attaching the recording directly to a debt collection file on the same client.

Debt Recovery Agencies

If the Do it Yourself Debt Recovery method is not effective, it may be time to call on the services of a debt collection agency. These agencies have trained staff dedicated to collecting outstanding debts and may save the business owner the time and effort expended to recover debts him/herself.

Source:

tamingthebeast.com, information retrieved on 17 September, 2009