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10 Effective Tips For Debt Recovery That Works For Your Business

Effective-Tips-For-Debt-Recovery-That-Works-For-Your-Business-MPM-Capital

Even if you’re a professional, calling the debtors and asking for money is not the most pleasant experience. Sometimes, even after all the trouble, you might not even successfully collect your debt.

Furthermore, some debtors always come up with excuses and stories, and every case needs to be handled uniquely. So, how do you deal with these issues?

Well, you don’t have to feel overwhelmed as we’re about to give you the most effective solution. Different types of financing can be solved with different approaches.

MPM Capital is here to share our 10 tips for debt recovery that will allow you to have a successful collection every time.

We know you’re eager to find out more. So without wasting much time, let’s get started!

 

Top 10 Tips For Successful Debt Recovery – The Most Effective Ways

When you have to deal with debtors all the time, you have to improve your negotiation skills. As every non-payer has their unique story and financial problems, you need different strategies to handle them.

To be honest, we cannot cover all the tactics in one session. For example, the methods for a dental clinic business are different from that of a cafe or restaurant.

But we are about to tell you about the tricks that will help you develop a new plan for every debtor.

So, let’s see all the tips you can use on any customer to collect your debts. Once you start applying these tricks, your collection calls will have the maximum success rate, that’s guaranteed!

Tip 1 – Always Be Prepared

Before making calls, make sure you have every tiny detail of the debtor in front of you. In this way, the customers will fail to catch you off-guard, and they can’t feed you false information!

First of all, you should be well aware of the debtor’s history with the company. And what were their previous payment records? Furthermore, remember the exact amount owed and the product or service they’ve purchased.

With these details, you will have more control over the situation. You can start with their payment history, the amount of money they owe, and the terms of sale. If you begin your conversation with these details, the debtor will immediately know that you’re the real deal, not an amateur.

And always keep the unpaid invoices in your hand. It will allow you to tell the exact date and amount the debtor tries to deny or forget about it.

 

Tip 2 – Be Prepared To Deal With Excuses

Let’s be honest, no debtor would avoid payment if they had the money to pay. They could just be caught in cash flow troubles and need some extra financial help like a business loan.

Of course, the moment you start asking for payment, the non-payer will have something in their pocket to divert your mind and delay the date. But your job is to stay still on your ground and deal with every excuse they throw at you!

There are some common excuses the customers use all the time. For instance, they’ll say, “My grandmother just died,” or “I broke my leg a few days ago,” and so on. But sometimes, they manage to whip up something more technical and witty, which are pretty hard to handle.

However, to successfully deal with these waves of excuses, you should prepare a list of common reasons for every debtor. And with some proper research, figure out some tactics to get your work done, no matter how strong their defense is!

As an example, here is a common scenario you can face during your collection calls.

 

Debtor: “Hi, I just sent you the check; it’s in the mail. You will get it in no time!”

If it happens, try saying this as a collector.

Collector: “Hey, thank you so much! But would you mind if I ask for the check number, amount, and date it was sent? I just want to make sure it was posted correctly!”

Sometimes the debtor would say that they’ve lost the invoice. In that case, mail them a copy as soon as possible.

 

Tip 3 – Act Professionally

If you want to make a friendly bond with the debtors, it is your call to make. But you should always approach with professional behavior to be in control. You can talk formally and be friendly at the same time; just try to figure out the sweet spot!

Here are some tips that will allow you to maintain professionalism effortlessly.

– When you’re talking on the phone, don’t chew or drink anything.

– You should always speak with a low-pitched, calming voice.

– Make sure you’re carefully listening to the other party.

– While having a face-to-face discussion, smile more often and assure them you’re on their side.

– Pronounce your words correctly and hold on to your ground.

 

Tip 4- Find Out The Reasons

You can sit and discuss with the debtors while they’ve left so many unpaid invoices. Ask if they’re going through any temporary cash flow issue or not. And you can set up a contingency plan for them to solve the problems so they can pay you as soon as the dilemma is gone.

If they need extra funding for their business, they can consider applying for a business loan. Experienced companies such as MPM Capital have provided unique and personalized loans to various industries, ranging from F&B to retail/e-commerce to education and more.

 

Tip 5 – Don’t Force The Issue

It is possible that your debtor is not in a good place right now. Maybe the non-payer isn’t paying you because that person isn’t capable of delivering that amount.

In that case, always keep a payment plan in your hand and offer it to them right away! A good repayment plan will help both you and your debtor.

If you apply this strategy, there are chances that you’ll get partial payment, and the debtors will feel relieved too! That’s just the best of both worlds!

 

Tip 6 – Have A Concrete Minimum

Sometimes the non-payer will come up with a counteroffer too. And to handle that smoothly, always have a concrete minimum that you can accept without any hesitation.

If the debtor can’t pay much, tell him all the benefits after paying you that specific amount. For instance, you can say that “If you pay us 60% of the whole amount right now, we will give you three months more to pay the rest of the amount.”.

When you offer something lucrative like this, you will have a higher chance of success. If the debtor thinks the deal is good enough, everything will be peachy for a while!

 

Tip 7 – The Customer Is Always Right

Even with all the melodrama and misinformation, you should acknowledge that the customer is always right. So if they have any complain and excuse, always reply politely and say something like, “I totally understand your situation” or “I can see how something like that happens.”.

When you act this way, the customer will lower their defense. You can easily enter into their circle to study the situation. It will help you understand the debtor’s current condition and, you can make some plans to cope with that.

 

Tip 8 – Stay Focused

It is quite normal if the customer starts complaining about your service. They will show disappointments, point out your flaws and try to make it look like it’s totally your fault.

If something like this happens, stay relaxed. Don’t raise your voice; stay calm and apologize. Once you lose your cool, you are the one to blame, and they’ll end up shifting every liability on you.

Hence, keep talking politely and make them think their opinion is validated. Just remember, your main goal is to get your money out. And you can’t do that if you piss off the debtor!

If the situation calls for it, suggest to them methods of improving their business cash flow.

 

Tip 9 – Ask Open-Ended Questions

Getting out sensitive details such as bank information seems a bit impolite. Hence, ask them open-ended questions like, “So you’re sending a check, I guess, what bank it will be drawn on?”

This trick will let you know all the info you need to learn without raising any suspicion!

 

Tip 10 – Confirm The Deal In Writing

No matter what happens, everything has to be in black and white.

When you reach an agreement with the debtor, whip up an agreement with all the clauses and details. And then let the other party understand and accept everything. Afterward, both of you can sign the papers and seal the deal!

It may sound a little troublesome, but it is definitely better to be safe than sorry.

 

Facts That You Need To Know About Debt Collection

Facts-That-You-Need-To-Know-About-Debt-Collection-Debt-Recovery-MPM-Capital

Before you start negotiating and collecting debts, you need to keep some factors in mind. Otherwise, you will end up doing something that will benefit the debtor.

Be Aware Of The Laws

Creditors or debt collectors need to behave politely with the customers in any condition. Though there isn’t any specific law to control debt recovery, you can get into trouble if you use any threats.

The debtor may file complaints against you if they feel threatened physically or if you try to ruin their reputation. According to the “Protection from Harassmentact, you’ll have to face outcomes.

 

Debts Don’t Last Forever

Yes, you have read it right; debts don’t last forever. And it is good news for the debtors, but it isn’t very pleasant for the collectors!

According to the Debt Recovery Laws in Singapore, after 6 years of no contact, a debt cannot be collected.  But don’t worry; some clauses can benefit the creditors too!

 

The Amount of Interest

No matter how big the amount is, you cannot charge as much as interest you want! You can check out the Moneylenders Act and the Moneylenders Rules 2009 to know your limits.

 

A Conclusion

When debt becomes older, it gets harder for you to collect. Therefore, you need to act strategically to get the best results! And hopefully, these tips for debt recovery that we just discussed will help you accomplish the mission without any hitches.

No matter what happens, you need to keep communicating with the debtors and apply all the tactics one by one. They may work slowly, but they’re 100% effective; there’s no doubt about that!

If your customer is really caught in a financial pinch, you can recommend them MPM Capital’s flexible and fast business loan.

With many years of financing experience, we may be able to lend a hand! 

 

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