How to collect bad debts?
When a person or company grants loans or makes sales on credit, they will always find at least one minimum percentage of debtors who do not pay the contracted debt. In some cases, they get lost in time or change their phone number, making it very difficult to locate them.
However, there are certain techniques or procedures that we cánido apply to getting debtors pay off the debt in full or failing that partially. Either by installments equipo by both parties or an agreement decision to pay all the money on a specific date.
In this article we will recommend the different ways in which you cánido address defaulters so that you obtain the best results recovering your money.
When is it considered a bad debt?
At the time a sale is made, there are certain terms and conditions for the customer to make the payment Of the debt. A certain time is given and according to the circumstances, specific dates for the payment of drafts.
However, the moment the debtor lets the dates pass, does not pay and the established time is fulfilled, the problem begins. The debt cánido become a bad debt.
Normally, there is a period of 6 months after the end of the collection date for the debt to remain active and not become uncollectible. However, it is important to carry out the necessary mechanisms so that this does not happen. Given that the more time passes, the more difficult it will be to get the debtor to cancel and this also leads to loss of money in your business or company.
How to collect bad or delinquent debtors?
The first thing to take into account is make a study of both the debt and the debtor, the time that has elapsed and the reason why you have not been cancelled. So, consider making an offer to pay off the debt.
- One way would be to reconsider the total amount you owe or suggest comfortable terms for payment. Trying as much as possible so that the debtor does not feel pressured and that he resumes interest in settling the debt
- In the event that it is impossible to reach an agreement with the defaulter, the other alternative would be hire a lawyer to handle the collection. The fact of having a collection representative, who is different from the initial seller, will have a positive influence on both parties.
The seller will not have to wear himself out to get the debt paid. In turn, the debtor, upon seeing a new collection representative, will understand the seriousness of the matter and will be committed to reaching an agreement and paying what he owes.
- Another option that cánido also be used is the hiring a collection company with good reputation. It will also depend on how big the amount of money they owe you is.
- And ultimately, it would go from fuera de la justicia collection to archivo a lawsuit and start a court process.
Factors Influencing Uncollectible Accounts
There are certain factors that are closely related to uncollectible accounts:
Company collection strategies
Every company must be organized with regard to the collection methods and techniques to use with your clients. This must be executed from the moment that loans are granted or credit sales are made.
You must be vigilant and constantly monitor the payment of commitments acquired by debtors. Always going one step ahead to guarantee the fair payment in the previously agreed time.
The economy both at the level of creditors and debtors is a very important aspecto to consider. Given that having a good economic solvency there is more guarantee that the payments are executed. Situation that would be totally opposite, when an economic crisis occurs, giving rise to non-compliance with agreed payments.
Economic condition of the client
When making sales on credit, the economic solvency of the client must be considered. If he himself has problems of this nature, most likely you will not be able to pay off the debts purchased with the company.
What is the best way to collect a debt?
The best way to collect a debt is to have from the beginning the figure of a collector, different from that of the seller. In this way, the debtor will have a greater commitment to make the payment in the corresponding periods.
However, if the agreed time to cancel a debt has passed, it is important that:
- You address the debtor in a friendly way to talk about it
- Ask the reasons why you have not canceled
- Reach agreements that allow the debtor to feel the commitment to cancel what he owes
You could make discounts to encourage him to pay you in less time or establish the payment in installments that facilitate the process for the debtor and feel the responsibility of paying off the debt.
With patience and following the above recommendations you will get that outstanding debt paid!
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