Negotiating debt repayment is not always an easy task. The people you are asking to pay up may be in awkward, difficult or even embarrassing financial positions, and may be resentful or defensive as a result. Debt collection can be an emotional minefield for all parties concerned. Therefore professional debt collectors are usually your best route to form an empathic yet objective interface between yourself and your debtor.
But however you choose to handle procedures, there are good points of advice for a successful outcome:
- Remind your debtor as soon as possible that payment is overdue. Begin with phone requests, but never initiate negotiations with a harsh demand. Always proceed with the intention of maintaining good will and respect. Many times the debtor may have forgotten that his or her payment is due and all that is required is a polite reminder.
- Alternatively, establish the reason for the non-payment, get an idea of the debtor’s situation, which may be temporary and the payment could be effected once the debtor’s problem has been solved. A good step would be to ask the debtor how he would like to resolve the issue, and whether he is prepared to make a gesture of good faith, such as a partial payment to begin with.
- This beginning of what might become a protracted process should always be conducted in the most professional manner. Be courteous but be firm, and make sure you have all the details accurately to hand. Also ensure the debtor understands the call is the start of a process of negotiation that will continue in an assured manner until payment has been effected. Always remain calm even in the face of bluster or a rude response. In this way, you establish the upper hand without intimidation.
- Never let the debtor feel you are putting them down or making them feel inferior. Establishing a relationship on equality, understanding and trust is vital in getting them to respect you and the process in which you are now both engaged.
- Know when a situation requires realism and pragmatism. If the debtor is genuinely unable to pay, be prepared to help establish a suitable way out of the impasse. A debt collector’s job to help the debtor to pay up, rather than force them with threats and aggression.
- Whilst you need to spell out the terms of repayment as clearly as possible, you also need to leave room for the negotiations on how a deal can be struck that suits all parties. There must always be room for manoeuvre. If they can’t meet your terms, ask them to come up with their own. It’s important for the debtor to know that the process is serious and will continue.
- Have a bottom line. Don’t negotiate without limits because then you lose control of the process. Know well-ahead just how far you can go on a deal. Have the deal established before you engage, because then you will know where lines must be drawn and points of agreement must be made. Your aim should be to strike a minimum deal that is reasonable but won’t take forever to be paid off.
- However, neither party benefits from entering into a payment plan that can’t be fulfilled. There is no satisfaction in trying to force an agreement on your customer. Rather allow an extra couple of months to let the debtor perhaps get their finances in order before re-energising the process. We recommend that should these steps fail, to hand the debt over for collection no later than 90 days.
- If any agreement is made by phone or a meeting in person, this must ultimately be confirmed in writing. The consequences should the debtor default on his promise should be made very clear at this point; and this confirmation must be signed by all parties concerned.
- After this, there should be continual contact with the debtor to make sure that the agreement is moving along as set out, and to ensure that the debtor understands he is being held to the agreed stages of the deal. Regular letters of progress and motivation should form part of this process.
- However, should the deal be broken, and legal action has to be taken, then it’s best to have a professional collections agency handle the process. They will apply their skills and authority, utilising their perspicacity and empathy to great effect – and you may doubtless receive your money timeously – but if you are forced to take legal action, they are the perfect partners to assist you with the requirements of a court case.
LegalTrack – how we do things differently
At LegalTrack we work with real people with real problems and therefore we apply a highly considerate and respectful approach to debt collecting. We understand that we need to be firm, but we are also aware that to negotiate successfully with an individual who is already in a difficult financial position, we need the skilful combination of empathy and experience, backed by well-honed communication capabilities. Our modus operandi is simple, direct, efficient:
- Our first contact is via an SMS.
- This is followed by a phone call to begin the negotiations on how the debt will be paid.
- All payment arrangements/negotiations are confirmed via letters, emails and text messages.
- Our promise is to constantly keep contact with our debtors in terms of all arrangements.
- Any legal action is considered the last option.