Debt Collection Tips
As I don't collect debts myself, I'd thought I'd share some of the basics with you so you can try to resolve it yourself without contacting a debt collection agency.
Debt collection agencies often work on a "collection for a percentage of the debt" business model. If you have a debtor who owes you £1000, and you know where they live (if you don't, then hire me to trace them!), the agency will ask for roughly 20% (£200) if they manage to collect the debt.
Factoring companies deal with bigger debts, £10,000+ or lots of little debts (if your company has 13 debtors owing £500-£1500). They buy the debts from you. They'd pay £4000 for the customer who owes you £10,000 and will then try to collect it. As far as you're concerned you've wrote the debt off of £4000, it's not your concern now.
That's the other two options available to you if you can't collect yourself. That means losing anywhere from 20% - 60% of the money the debtor owes you!
So try these tips, and remember you have to be licensed to collect anyone else's debts.
1) "The cheques in the post" or "I can't pay" - Ask them to send another cheque by recorded delivery if you don't recieve it within 5 days after speaking to them. If they can't pay ask them Why not? How much can you afford to pay now? When do you expect to be able to contunue the original payment plan?
2) Make a point of calling all of your non-paying debtors at least once at the end or start of the month. Just to do a quick check in. Most people get paid monthly. Have them thinking about your debt when they get paid. You could even ask them when they'll be expecting their next wage, so as to arrange a better payment plan.
3) If they live locally visit them at their home. Dinner time from 5pm - 7pm. That's when you're most likly to catch them. You may also catch them by surprise! Theres a good chance no one else knows about the debt and they will want to keep it that way - by paying you!
4) Expect the collection proess to take anywhere between one month and a year. If its too much bother then hire a debt collection agency.
5) Remember, it may be against the law to openly tell anyone but the debtor about the money they owe you.
Hope that helps,
Andy on 06.18.06 @ 01:45 PM CST [link]