3 Debt Collection Mistakes to Avoid

For businesses and consumers, the debt collection process is tough. When you’re creditors your own money, or even when you are dealing with the debts of others this is an area that also needs to be approached carefully. A botched debt collection can be expensive, both financially and in terms of client/customer relations. 3 Pitfalls in debt collection to steer clear of

1. Ignoring Legal Guidelines

One of the biggest debt collection wrongs is that collectors do not follow legal patterns. According to the Fair Debt Collection Practices Act (FDCPA), a lot of do’s and don’ts exist when it comes to dealing with debtors. Failure to abide by these standards can result in lawsuits and penalties. Be sure to learn more about the regulatory environment for your debt collection within Australia. This includes you knowing what your rights are, the debtor’s rights as well as how to communicate correctly.

2. Not Documenting Interaction

The debt collection process requires proper documentation. Not recording enough detail on each of your communications with debtors is one of the most common errors made by collectors. However, this can also create a confusion; conflicts and potentially even charges of sexual harassment may result. Keep a record of all phone calls, communications (email or mail), correspondence about the debt. Not only does this cover you in disputes, it also creates a documented history of your collection efforts. Having documentation to support what you agreed upon can benefit your case if it goes down the route of negotiating payment plans or settlements.

3. Ignoring customer relationships

Indeed, the aim is to get debts collected but it should be kept in mind that these interactions are with real people. The most common mistake is to consider debtors only as accounts gone bad, rather than valued customers facing temporary difficulty. This can be due to limited customer relationship management(for repayment encouragement) and building of persistent relationships with customers. Be kind and supportive during this difficult time. Give them some payment flexibility or solutions and you might find debtors more agreeable to working with your company when they feel like they matter.

Conclusion

When you keep these three typical errors in debt collection at bay, and your odds of irking a visible part while making sure that the recovery percentage remains fully satisfied are really quite good. Stay up to date with the legal requirements, keep good records and be empathetic when reaching out to debtors. And that way you can steer the never-too-exciting maze of debt collection processes, effectively and says ethically.