Debt Recovery

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Debt Recovery

When the number of bad debts you have start to pile up you are losing a lot of the cash flow in your company because you have clients that just don't pay. You can send out reminders and make telephone calls to the client. Once the client sees that he/she can use delaying tactics, such as promising to make payment, with no intention of doing so, the process just repeats itself month after month. If you have several clients doing this, then this seriously impedes your business and you have to seek help in the debt recovery process.

There are debt recovery specialists at collection agencies that can help you recover the money your company needs for its day-to-day operation. You loaned the money in good faith and the law allows you to collect. For many reasons, companies often write off the money as an unrecoverable debt because thy just don't have the time to spend that the case needs to bring it to fruition.

How Does the Debt Recovery Process Work?

You can start the collection process by sending out letters to each client stating the amount of money owing and the date due. It helps to include a copy of the agreement the client signed so that you make sure the client is aware that he/she did make this agreement. Make it a practice to send out the requests for payment on a monthly basis and keep records of all correspondence. When an account is overdue for at least 120 days, then you can inform the client that you are passing it over to a collection agency for debt recovery.

Clients often call up with a sad story of their financial problems. You can give the client a break but when several months pass and there is no change, you realize that this person has no intention of making good on the promises. The agents at a debt recovery service have heard all the sad stories and know how to handle them. They only have one question for the client when are you going to pay?

A collection agency will send out a letter requesting payment and wait for an answer. If they do not get an answer by the time specified on the letter, another will follow. Then the telephone calling starts to try to get to speak with the client. In all of this, the agents do follow the guidelines set out by the Fair Debt Collection Act and will not harass your client.

Sometimes, the client will contact you with a promise of payment after having been contacted by the collection agency. It is best if you tell him/her that the process is out of your hands and the collection agency will handle it. This is because you set up an account with the collection agency to pay a specific percentage of the amount collected and you are breaking this agreement if you allow the client to pay you instead. Collection agencies are usually effective at debt recovery because the clients know the agency will keep sending letters and calling until they get the payment.

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