A debt collector’s etiquette is integral to the long term success of a collection company’s processes. Whilst aggressive strategies or even hounding customers may work in the short term, they can be extremely counterproductive in the long term.

The amount of time a customer is delinquent or stages of delinquency can determine the type of strategy you deploy. Customers in the early stages of delinquency, i.e. those who are late by one to thirty days may have simply forgotten that their debt is due. Simple reminders are effective at clearing payments in this stage.

However, those in the mid-stage of delinquency, i.e., those who are late by thirty to sixty days, may require a more nuanced approach such as segmentation and semi-automated batch skiptracing that can identify cohorts of customers for whom distinct collections techniques will work. A McKinsey report also revealed that success in location rates in excess of 10% through automated skiptracing.

Lastly, a debt default may be on the cards for customers in the final stage of collections, i.e., those who have not paid their dues for more than sixty days. Although writing off the account is an option, understanding a customer’s predicament and renegotiating terms greatly improves chances of success. 

Below we review simple methods to collect the right way.

Basic Collections Etiquette

Poor collections techniques can lead to higher customer defaults. In order to succeed as a debt collector, you need to consciously employ better strategies. Understanding, empathy and negotiation skills can work far better than threats or pressure. Following basic collections etiquette will ensure that you win the task you are out to achieve.

1. Understand Debt Collection Principles

Firstly, you don’t want to employ illegal techniques to collect debt. For instance, the law prohibits public distribution of information about a debtor’s dues. This means you cannot post about a person’s debt on their social media accounts to pressure them into payments. Apart from being illegal, it is also unethical to humiliate a person to pay up. Instead, establishing a relationship with the customer through a private channel can help you come up with better terms. It can also set the precedent for long-term relationship management.

2. Make The Best Use of Resources

As a debt collector, you have to be smart about the resources you have on hand. AI and automation can help you establish contact with a customer. However, how you interact with them afterwards is up to you. Speak to experienced collection agents in your company and find out what approaches worked for them. In all probability, they will tell you how a solid conversation that is empathetic works better for collections than aggressive techniques.

3. Follow a Customer-Centric Approach

Putting the customer first can improve debt collections. As a debt collector, you should avoid things such as using vulgar or offensive language, calling at odd hours to catch the customer off-guard, or reaching out to their friends and family as a pressurizing technique. Instead, convince the customer why paying up is in their best interest and come up with terms that are agreeable to them.

Takeaway

Clearing debt is important for a company to maintain its bottom line. However, as a debt collection agent, you must always be cognizant of the company’s reputation and long-term benefit. Being empathetic and smart with collections can lead to a better success rate than following short-term techniques.