Jun 14, 2021 MicroBilt News
Is your company still using debt collection services that originated with the dinosaurs? Phone calls and threatening letters are old-school methods that are neither effective nor productive. It is time to move into the digital communication age.
According to the National Consumer Law Center report of February 2018, approximately 70 million Americans had debt collection in the previous year. The biggest cause of default on debt is illness, divorce, unemployment, or unanticipated hardship.
Debt collectors contact consumers more than a billion times per year. Debt collection has the largest number of complaints to the Federal Trade Commission. This means making sure you are following the rules of debt collection is important.
Successful debt collection is more challenging now, with so many people out of work due to COVID-19. When you have a suite of recovery and skip tracing tools working to track down and collect from your past-due accounts, your collection efforts will move in a more productive manner.
Always Be Prepared
Just like the Boy Scouts, always be prepared prior to make contact with a delinquent customer. Have all documents on hand.
This includes contracts, the schedule of payments made, and any other information regarding the case. This allows you to address any discrepancies, clarify terms, etc. as necessary during the conversation.
Make sure your tone of voice and words are polite and not accusing. Listen to what the customer says and be ready to take extensive notes while discussing the debt.
Debt Collection Software
When managing debt collection, you need software that is affordable, easy to use, and fits your needs. You also want it to be workable across all platforms, including PC, iPad, Mac, cell phone, etc.
Offering a debtor payment portal for the receipt of online debt payments makes it easy for those who owe you money to pay by credit card or ACH. On-the-spot payment is an easy way for debtors to clean up their accounts with your company.
You want software that allows you the option of contacting debtors using multiple methods. This includes telephone, SMS, standard mail, fax, and email. This allows you to reach out to those who owe money in multiple ways that ensure they receive your message.
Skip Tracing helps to track down the debtors you have in collections. Super Phone is a skip tracing tool that uses a diverse collection of data when searching. Scanning files of retailers, service providers, third-party payment processors, financial institutions, and telephone carriers make it easy to find everyone that owes you money.
You need a system that uses analytic algorithms to score and determine the debtor’s ability to pay. Information that is current and continuously updating ensures that the information you have is accurate. This information helps predict the likelihood of a successful collection.
When you are able to learn a consumer's ability to pay and assess their financial stability, you may then prioritize your recovery efforts. Seeking recovery from consumers who are more likely to pay is more lucrative for your business.
Bank and Debtor Locator
Different than skip tracing, a bank and debtor locator tool allows you to search collection professionals and credit data to find information regarding employment, address, and credit inquiries made on your debtor. This includes information on employment, address, and credit inquiries made by your debtor. This tool is useful if your collection efforts become a legal collection action.
Debt collection lawsuits are increasing. They make up approximately one out of every four civil lawsuits filed in the United States.
Almost 15% of U.S. citizens have been sued by debt collectors. Only about 26% actually attend the court hearings. This results in over 70% of collectors receiving default judgments.
Debt Collection Emails
With debt collection, compliance with rules can be difficult for even the most diligent. Human emotions and errors can be costly. To avoid risk agencies are now doing digital debt collection by code-driven emails.
The safest manner is to use a pre-written debt email. Everything can be completely checked to make sure it complies with federal regulations.
Data Analyzed Communication
When you are attempting to collect a debt, the way you speak with your customers can make the difference between retrieving everything or nothing. By using a friendly tone of voice that is non-confrontational, the customer will be more receptive to speaking with you.
Show concern for the customer’s difficulty in making payment. Ask if there is anything you can do to assist them in fulfilling their financial obligation. By acting with concern for their dilemma, you can prevent them from feeling defensive.
Even in a debt collection email, phrasing can determine whether a client mentally shuts down or proceeds. Something as simple as changing “pay now” to “view my statement” can make the difference in whether or not a debtor clicks through.
Knowing where you are in the debt collection process is important to maintaining cash flow for your business. Traditional collection agencies offer only monthly remittance reports. When you move into modern digital debt collection you are able to view creditor dashboards that provide you with up-to-the-minute information about where your debt collection stands.
Debt Collection Payment Plans
When a consumer is having trouble paying a debt, adjusting their payments may be all that is necessary for them to fulfill their obligation. Due to the economic hardships, many are facing due to the pandemic, it is easy for a consumer to feel overwhelmed by financial obligations. This is especially true for those who have never dealt with a lack of income prior to now.
By customizing a plan, you are able to develop a method that is flexible to meet the customer’s needs and has a greater chance of collection success. By assisting your consumer, you are taking the steps to restore and maintain a solid business relationship.
Once you establish a payment agreement, verbally summarize it so make sure the client has the same understanding as you. Send them an email or letter putting the agreement and all terms into writing.
Even if the client is unable to send payment now, they may be able to in the future. Keep the lines of communication open and cordial so it is easier to collect the debt over time.
Microbilt Debt Collection Services
Here at Microbilt, our tools for skip tracing and debt recovery provide you with the data you need to prioritize and track down those who owe you money. With more than 40 years of experience, we are a pioneer in debt collection services.
Microbilt is a registered consumer credit reporting agency. Our products are compliant with all federal regulations. We customize our debt collection services to meet the needs of your organization, no matter how big or small.
We are happy to answer your questions, simply call (800) 884-4747, or for our sales office dial (800) 884-4397. You are also welcome to complete our online contact form.