Debt recovery poses a challenge to various organizations. When debtors take too long to pay what they owe, the organization or company can easily run into revenue issues. Therefore, there is a need for companies to develop effective debt collection strategies.
When you develop an effective debt recovery strategy, you are more likely to have a steady revenue stream. Debtors will pay what they owe, and in turn, you can maximize resources, save time, and reduce costs you end up paying while trying to recover debts.
If you want your company or organization to collect debts more effectively, this article is for you. Here are a few ways you can develop an effective debt recovery strategy.
Have up-to-date data on your debtors
It is important to have up-to-date disparate data on your debtors. Therefore, ensure you update your information, especially when there are major developments. For instance, if a debtor relocates, is incarcerated, or is declared bankrupt, their ability to pay the debt may significantly be affected.
Gather all the important data you need for effective debt collections. It would help if you used different data sources. Once you have enough data on your debtors, highlight the important information to make debtor tracing and debt recovery strategy much easier.
Make sure you have up-to-date information on your debtors for effective debt recovery. This way, you can easily prioritize the debts you should recover first.
Follow up on payments.
Before resorting to taking legal action against your debtors, try following up on payment. You can send debtors scheduled reminders through e-mails and SMS. When debtors get such reminders, they are likely to see how serious and urgent the issue is. Some debtors end up paying after getting consistent reminders.
Prioritize debt recovery and collection
You need to prioritize collections and recovery. First, categorize the clients into two, those who are more likely to pay and the ones that are the least likely to pay. You can easily categorize them using the data you have on them. Note that if a debtor’s account has remained delinquent for a long period, it is unlikely that they can easily pay off the debt.
Start trying to recover the debt from debtors who are likely to pay. This way, you can recover more funds faster than trying to recover money from all the debtors at once.
Use a reliable debtor tracing service.
There are instances where debtors relocate without informing lenders where they are. Consequently, it becomes almost impossible to collect the debt since the debtors don’t leave a forwarding address behind. If this happens, consider using a tech-driven skip tracing service to locate the debtor.
Debtor skip tracing services use various data sources to locate the debtor. Once you know the debtor’s location, you can easily recover your debt.
Take legal action
If a debtor refuses to or cannot pay what they owe, you have to decide whether or not you will take legal action against them. Before taking legal action, you need to consider whether the decision is resourceful. If a debtor is unlikely or unable to repay the debt, you will waste resources trying to pursue payment in court.
Debt recovery and debt collection departments can easily get overwhelmed when several of your debtors default on payment. It is particularly difficult to track down debtors intentionally hiding from their lenders. If you are having trouble with debt collections or recovery, contact us and start your free trial. Our experts will take the burden off you and help you recover debts faster and more efficiently. Additionally, you will have access to critical information about debtors, which will come in handy during debt assessment.