Collection agencies are in charge of collecting outstanding debts owed to a company or individual. When debtors fail to pay their bills, the creditor must take action.
Typically, a letter is sent demanding payment with an explanation of the consequences if the debtor does not comply, however, it can be difficult to collect on unpaid debts because there are many factors that determine whether or not you’ll be successful.
These may include the type of debt, how long it’s overdue, and if you have a written contract and if you want to successfully collect on unpaid debts, read this brief guide for some helpful tips.
Collecting on Unpaid Debts
Debt collection is a common reality in business, outstanding debts are inevitable, and you’ll need to take action to collect on them collection agencies such as inkassobureau (debt collection agency) are in charge of collecting these debts for a company or individual.
When debtors fail to pay their bills, creditors must take action to collect the outstanding debt, typically, when an account becomes overdue more than thirty days, the creditor sends a letter demanding payment with an explanation of the consequences if the debtor does not comply.
However, it can be difficult to collect on unpaid debts because there are many factors that determine whether or not you’ll be successful. If you want to successfully collect on unpaid debts, here are some helpful tips:
- Use emotional persuasion
Emotional persuasion is more effective at getting people who owe money to pay up than rational persuasion is, creditors should appeal to the emotional side of debtors by using persuasive messages that evoke fear or guilt.
- Be persistent
It can be difficult for creditors to get people who owe money to pay up because there are many factors that determine whether or not they’re successful see above.
Be persistent and make sure that your message is delivered often enough that it sticks with the debtor and constant reminders will make it more difficult for debtors to avoid paying back their debts and easier for creditors to get what they’re owed.
- Offer repayment plans
One-way creditors can reduce the risk associated with collecting debts is by offering repayment.
Reasons Why Debtors Won’t Pay
When a debtor doesn’t make their payment, there are many reasons why they won’t pay, the main reasons include the following:
- The debtor has no money
- They have poor credit and can’t get a loan
- They have a low budget for living expenses
- They already paid the debt off
- They’re in a financial hardship
In order to ensure that you’ll be successful in collecting on your debts, you need to determine what type of debt it is and if the customer owes you money and they don’t want to pay you back, then it’s an unsecured debt.
If you refuse to accept anything less than full payment from the debtor, then the debt is considered secured, secured debts are easier to collect on because you can take action against collateral like property or vehicles.
However, unsecured debts are more difficult because the creditor has nothing to collect against, so for this reason, it’s important that consumers carefully consider whether or not they have enough money for living expenses before taking on any new obligations.
Once you determine what type of debt it is, then think about how long it’s overdue and if there’s a written contract between both parties.