5 Tips to Collect Your Debts the Easy Way
Collecting outstanding debts doesn’t have to be difficult. Like most business processes, there’s an easy way and a hard way to go about collecting your debts. Having said that, most business owners try to collect their debts without a sound strategy in place. This can be ineffective at best and at worse it becomes stressful, painful and debilitating by creating unnecessary stress and lost time. For business owners it increases the risk of legal ramifications and often leads to debts never being paid – the very outcome you we’re trying to resolve in the first place.
The Risks Of Recovering Your Own Debts
It’s important to take a professional approach to debt collection, one which is objective, well informed, realistic, planned, professional and personable.
By diving straight in and contacting a person who owes you money without a plan, it’s easy to make costly mistakes. Mistakes can be made by sending emails, making calls and risking being seen as harassing your debtors. Further, there are agreed rules by which you can contact a debtor laid out by the ACCC which you must adhere to.
As a worse case scenario, your efforts could create more issues than they solve. For example, a poorly planned approach not only can nullify your chances of collecting those debts but further it could create legal issues that work in the other parties favour, should the dispute ever proceed to go to court.
How to Recover Your Debts The Easy Way
Today we look at 5 proven debt collection strategies which you can use immediately to help get the wheels turning in the right direction. These simple strategies will help give you the best chances of collecting your outstanding debt the easy way.
1. Communication – Be Calm, Fair and Objective
It’s easy to get swept away in the heat of the moment, especially when it involves money. A debt often represents something very different to you compared to the person who owes the debt. It represents lost revenue and more importantly the time, energy and effort spent delivering a service to a business or a customer that simply refuses to pay. It might also take the form of a broken promise to pay on time at agreed terms, by going out on a limb to make a loan to help someone or by extending your services to a client upon an agreed promise to pay at a later date.
When that money becomes a debt of concern it usually triggers an emotional response as we think about all the hard work we extended to that person based on the promise of being paid. With the looming possibility of your efforts now being worth zero, it can be difficult to remain fair, unbiased and emotionally calm – 3 critical factors when dealing with a debtor.
Should the debtor feel threatened or treated unfairly, there’s a good chance they will decide to no longer cooperate. This forces you down a costly legal avenue, which could have been avoided if the doors of communication we’re kept open.
A key piece of advice is to try to remove yourself from the emotional attachment to your debt and what it represents to you. If you are emotionally pursuing your debts, not only will it affect your peace of mind, but it can lead to legal ramifications if done carelessly.
Simply put, there is a legally sound method to pursuing debts, things that can be said and things which can’t. We always recommend being aware of this and taking a legally sound method to avoid having your debt ruled out or worse having the legal tables turn against you, costing you money in a lengthy court case. Learn more by visiting the ACCC or ASIC.
As a professional debt collection agency, Ezi Debt Collection acts as an impartial third party. We use legally sound practices for collecting debts, making it easy for you to avoid the common traps when trying to do it yourself.
2. Be Realistic – Assess Your Debt Value, Quality & Time
Pursuing your debts isn’t exactly the brightest part of your day, furthermore it costs you time, money and energy without any guarantee that your efforts will pay off in the form of debt recovery. One of the biggest pain points for our customers is spending weeks upon weeks chasing their debts and getting nowhere, except increasing their level of stress and losing a great deal of time in the process. This time can be spent on more productive (and fun) activities, such as serving existing clients. Further, many business owners simply can’t afford to pursue their debts effectively due to their current workload and the needs of their business.
You have to be realistic and understand which debts (by monetary value, and likelihood of payment) are worth your time pursuing and which ones simply are not. This is a simple cost benefit analysis of each debt, choosing the ones which are worth your time.
Another way to look at the situation is asking yourself how much your time is worth, and in turn, how much you are prepared to pay to have someone handle your debts. This is why debt collection agencies exist, they save business owners’ the time and hassles of collecting their own debts, usually charging a percentage fee only when a debt is successfully collected.
By specialising in debt collection a good agency will professionalise the collection service, act as an independent third party and allow you to focus on what matters most in your business (usually this isn’t chasing debts, unless you work for an agency like us!).
For large debts with good quality clients, it’s probably worth investing your own time communicating with them, meeting with them and negotiating a payment plan. However, when it comes to run of the mill small to mid sized debts, or large debts which are non responsive to all approaches, then it can make sense to use a professional debt collection agency.
3. Make a Plan – Be Strategic, Firm and Flexible
Every good debt collection service has a methodological plan, a system that has been streamlined over time and experience for the purpose of delivering the best results for recovering debts. At EDC we make our system open and transparent, so you can simply login and see how it all works.
We take a firm, professional and personable approach which accommodates the needs of both parties (debtor and creditor), in a way that facilitates open communication, transparency and makes it easy for people to pay back their debts.
Our systematic approach starts with email notifications, SMS notifications and progresses towards phone calls with an Ezi Debt Collection case manager. As a starting point, this initial stage ensures the debtor is firstly aware of the outstanding debt, the amount and the terms. It also ensures that there’s no confusion or grounds for dispute while gauging their intention to make payment or not.
We then give the debtor the option of payment plans, whereby providing a gesture of leniency we allow them to do the right thing whilst finding a way to fit payments into their monthly budgeting and cash flows. This allows both parties to find a solution that meets their needs, without progressing to a stand off or legal action.
Did you know? One of the most common reasons debts aren’t paid is due to either a dispute over the amount or an inability to pay the whole amount at once.
4. Be Human – Professional and Personable
If you choose to collect your debts yourself, it’s important to remember that you’re dealing with a fellow human being. This sounds obvious, but it’s an important point. Human beings are emotional creatures and whether you’re dealing with a small business owner or the chief financial officer at a large corporation, they are the gatekeepers and they still decide if you will get paid or not.
By maintaining a professional code of standards and a personable relationship, you are far more likely to recover your debts. This helps you keep the communication channels open, getting regular updates from the client over time until your debt can be paid down.
A worse case scenario is the breakdown of communication, which means you are left in the dark with no way of knowing if there is an intention to pay or not to pay. At this point, there are very few options available and often the final option is to take legal action where the debt will be heard in court. This is the most costly and time consuming of all options.
5. The Last Resort – Legal Action
This leads us to our last point. Once you have exhausted all avenues for collecting your debts, through emails, written letters, phone calls and sms, the only avenue left available is taking legal action and going to court.
You have to ask yourself if this debt is worth spending several thousand dollars going to court over, not to mention your time, energy and stress throughout the entire legal process which can drag on for months.
Often with large amounts of quality, well documented debts it can be worth your time pursuing them in court, however the only way to correctly assess your case is by speaking to a lawyer, showing them your debt records and gauging how likely it is you will succeed.
Even if you do succeed, there is still no guarantee the debtor will actually pay. Having said that, there are more stringent legally enforceable options available to you at that later stage.
Recovering Debt The Easy Way
The good news is, when debt collection is approached in the right way, you tend to have a higher chance of successfully recovering your debts. At Ezi Debt Collection our process is free to use and as simple as creating an account, uploading your debts and sitting back while we do what we do best.
Ezi Debt Collection is the only free-to-start platform that manages, services and recovers your debts for you. It’s easy to use and free to get started with a no collection, no fee policy. We integrate seamlessly with most book keeping programs.
Learn more about getting started with EDC and collecting your debts the easy way.
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