Traditional debt collection only focuses on the actual process of recovering money. It has nothing to do with customer relationships. But in the modern business era, customer relation is valuable to grow a business and gain a foothold in the industry. This has made hiring a debt collection agency imperative to maintain customer goodwill and ensure them that the company believes in harmony, and not blackmail.
Personalized debt recovery
The first step to improving customer relationship while opting for personal debt collection services is to offer personalized debt recovery options. Customers who genuinely have problems while paying back a loan will find these options helpful. You can introduce flexibility in payments such as paying through net banking or their debit or credit cards.
Sometimes, increasing the debt recovery time can work wonders for the customers. They will be in a better position to pay when funds arrive. Apart from flexibility in payment time, you can also waive off the interest rates for a particular period. For example, if your customer owes $1,000 and the repayment date is 3 months from the date of lending, you can increase the time for a month and specify that no interest will be charged in the fourth month, but if there is a delay in payment after that, the customer will have to pay an increased rate of interest.
However, it is always wise to consult with the collection agency about the strategies you want to implement. There is a difference between personal and business debt collection methods. The collection agency shouldn’t be too harsh or aggressive on the business owner who owes you money. Since the goodwill of both businesses is at stake, a softer approach will be beneficial for everyone. You wouldn’t want to damage the long-term relationship with the other business because of a pending claim.
Avoiding bad debts
Bad debt is a dent to the company’s profits, and that is the worst thing that can happen if the debt collection agency fails to do its job correctly. But there are several techniques to avoid bad debts. They are as follows:
- Always perform a quick credit check on the customer before discussing payment terms. If the customer has a poor credit report, try giving them an extended repayment period for a small amount of money.
- Always have a signed contract where the terms and conditions of the credit application are mentioned in detail. Ask the customer to read the offer documents carefully before signing.
- Always follow up on the customer days before the contract expires. This will act as a gentle reminder to the customer about the repayment date. Discuss the consequences of late payment and see what their reply is. You can inform everything to the debt collection agency so that they can try other methods to get the money back and maintain the customer relationship.
Modern business is more about customer satisfaction than profits. But if you need to balance both at the same time, hiring a debt collector will be essential because they come up with innovative techniques to recover the money without hampering customer relations.