Unpleasant as it may be, the word debt is an indispensable part of the business environment. The reason why it got such a bad reputation is not so much because businesses are afraid to let their customers pay some product in installments (there are obvious benefits to this) but rather that recovery of those debts can, for a variety of reasons, become very troublesome. The approach you will take in such situations can have a great effect on the relationship with your current and future customers, so let us take a look at some of the ways you can handle them in the most graceful manner.
Be it in a form of letter or an email, reminders are, by far, the most widespread of the recovery methods, but, unfortunately they are not always the most efficient ones. Although you have nothing to lose by sending them, be aware that they have an effect only on the customers that intend to pay, but have delayed the payment because they were unaware of the due date or were forced to. Articulate the reminder in the understanding and patient tone and you will make sure that your actions will not leave any bad impression.
Stay in Contact
Although staying in touch with your customers should not be so much a byproduct of your strategy for recovering debts but rather your marketing and retention strategies, there is no reason why you would not use these already established communication channels for keeping the customers up to date with their obligations. Try to be as subtle as possible, though, because if you put the strongest focus on recovery, you may potentially hurt your marketing agenda.
Offering incentives for timely payments to your debtors may sound somewhat strange at first, but this recovery strategy showed great results, especially with businesses with large number of indebted customers where more personal approach is simply not possible, and the price of recovery usually outweighs the price of incentive. Offer your customers attractive bonuses and discounts for early payments and you will make sure that most of them will stay on schedule.
Make a Personal Visit
If various reminders are the most common recovery method, making a personal visit is the most efficient one. The obvious elephant in the room here is that personal visits cannot be pulled off on a large scale, so they should be saved only for the important debtors like high-value customers. Make sure to do a thorough research on the debtor before finally paying a visit in order to find out what kind of approach you should take and is there any room for possible negotiations.
Renegotiate the Terms
Speaking of, if you feel that you are not going to be able to recover some debt, you should leave a door opened for possible renegotiation of debt terms. It is generally much better to agree on prolonging the deadline, smaller installments, compensation, or even a small write-off, than to waste your time and money on the court and hurt your public image in the process.
Hire a Debt Recovery Agency
Finally, you can always find some reliable agency that will handle the debt recovery instead of you. Although that factually removes your business from the collection process, the benefits of such move far outweigh its risks. Not only the debtors are, generally, more afraid of and willing to cooperate with recovery agencies, you will see, sooner or later, that some difficult cases cannot be resolved without the help of trained professionals with years of experience in such matters.
Debt recovery is certainly not the most pleasant task your business will ever face, but it is, nevertheless, the unavoidable one. Keep in mind everything we said above, try to choose the method that will suit your current situation the best, do not play bully, and your business’s good reputation should remain intact.