Speed is Necessary in Debt Collection

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Which single element of debt collection contributes the most to the success, or failure, of receiving the payments you’re owed? Pin-pointing a single “most important” element of the process is difficult, but a strong case could be made for speed. The longer a debt is outstanding, the less likely it will be paid off, it’s as simple as that. For this reason, the most effective collection firms all work on the tightest timelines possible.

Many of our competitors will tell you that collecting outstanding debts takes a long time, and successful collections tend to occur at the end of an extended period of harassment and provocation. This is nonsense. With the right, respectful, and fully legal tactics, favorable debt collection will often occur within 30 days of handing your accounts over to a qualified collection firm. A truly qualified collection firm will be able to achieve fast results using the right combination of intelligently worded letters and non-harassing phone calls.

Cases that aren’t resolved by about a month’s worth of letters and phone calls aren’t going to be resolved by a year’s worth of letters and phone calls. For these accounts a different tactic is required- the threat, and eventual procedure, of legal action. If a debtor will only respond to legal action then there’s no reason to wait to levy this ace-in-the-hole. The explicit threat of legal action is often enough to elicit payment from stubborn problem debtors. For those debtors who still refuse to pay, court action is all but guaranteed to result in a ruling in your lender’s favor.

It doesn’t take a whole lot of time to determine whether a debtor will respond to conventional tactics or whether tougher measures are required. Once this determination is made, waiting around to proceed with those tougher measures will simply delay the receipt of your payments. 

The Importance of Varied Collection Tactics

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It isn’t enough to simply hire a collection agency that doesn’t use underhanded tactics to attempt to pressure debtors into paying- you need to hire a firm that utilizes a variety of different tactics to increase the chances of acquiring the money owed to you. Tactical variety is important for a number of different reasons.

First, it can be more difficult for a debtor to lodge a legal complaint against a collection agency that uses a variety of low-pressure tactics than a collection agency that hammers them repeatedly with the same tactic. For example, a collection agency that calls their debtors multiple times a day is a much clearer candidate than a collection agency that occasionally calls, occasionally sends a letter, and occasionally makes a personal appearance.

If an agent repeatedly calls a debtor and that debtor never picks up the phone or calls the agent back, it’s clear the phone doesn’t offer a viable form of communication. As such, any agent who persists in calling proves they are simply attempting to pressure their debtors and isn’t attempting to discover a legitimate communication channel with them.

On the other hand, an agent who uses multiple communication channels is more clearly searching for a way to speak with their debtor about their outstanding account. As long as an agent uses a varied set of collection tactics within the bounds of the law, they inhabit a far more legally defensible position.

Varied collection tactics are also more effective than a single tactic, used repeatedly, because varied tactics are more difficult to defend against. A debtor who solely receives repeated phone calls from a collection agent needs to do nothing more than ignore those calls to wall themselves off from taking responsibility for their debts. An agent who uses multiple tactics has a considerably greater chance of getting through their debtor’s defenses and actually making contact. 

Even More Reasons to Work with a Responsible Collection Firm

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There are plenty of reasons why choosing to work with a responsible collection firm is a wise decision. Not only are responsible collection tactics less distasteful than the “thug tactics” employed by many collection agencies, but relatively respectful collection tactics are more likely to produce favorable outcomes with your debtors as well. There’s a third, even more important and even more practical reason to choose a collection agency that does NOT utilize inappropriate tactics- there are laws against the most common debt collection harassment tactics.

At a very base level a collection professional needs to be polite and respectful to the debtors they speak with. Collection agents aren’t allowed to bully or otherwise act in an excessively rude manner to the debtors on their lists. While a collection professional isn’t likely to be reported if they speak in a manner a debtor considers “rude” or “disrespectful,”such a manner will hurt your case if your debtor’s account goes to court.

One of the most common forms of harassing behavior utilized by debt collectors is a continuous string of phone calls at inappropriate times. Now, there’s nothing wrong, illegal or immoral about calling a debtor about the money they owe. But legally speaking a collection agent can only make these calls during a range of hours that have been clearly defined according to state and federal law. The laws dictating when a collection agency can call a debtor differ from state to state, and if an agent repeatedly makes calls during prohibited hours they can be sued for harassment.

Harassing behavior does more than simply lower the chances you will collect from your debtors- it gives your debtors legal ammunition to use against you. 

Why Consumer Debt is the Biggest Threat to Your Business

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If you’re a business owner then you likely feel besieged at all times, from all sides, by threats to the organization you’ve crafted and cared for. None of these threats should be discounted, yet some of these threats are more dangerous than others. It’s natural to feel your direct competition, or changing technology, is the biggest threat to your business. But ultimately the biggest threat to your business is consumer debt.

Consumer debt threatens your business in a variety of ways. From a “big picture” viewpoint consumer debt threatens your business because it threatens the larger economy which you operate within. High levels of consumer debt lead to unstable economic conditions, which lead to conservative policies within banks, the same banks whose loans you rely on to expand your business.

Taking the scale of the discussion down a notch, consumer debt is also dangerous to your business because large-scale consumer debt can reduce consumer purchases of goods and services, including your own. After consumers reach a certain level of debt they simply stop buying non-essentials, and this is especially true during hard economic times where lots of people are either out of work or have had to take on pay cuts.

But on a more 1-to-1 level, consumer debt is an incredible threat to your business if you allow your consumers to open up lines of credit with your company. It might sound like a good idea to open up lines of credit with your customers, doing so provides you with both the initial sale and the miracle of compound interest, but what happens when your customers stop paying that debt? What happens when they default on the debt they accrued with your organization?

Taking Responsibility as a Collection Agency

Collection agencies don’t always have the best reputations, and often with good reason. Many collection agencies utilize a whole suite of underhanded and downright immoral tactics in their quest to receive payment on their accounts. While tenacity is certainly a good thing in the world of debt collection, there’s no need to resort to unsavory tactics in order to close a case. Any collection agency that resorts to harassing, bullying, and applying negative pressure to their debtors is simply proving their lack of expertise in this admittedly challenging field.

Most lenders would prefer to collect from their debtors without their collection representative resorting to these sorts of tactics for a couple reasons. The first of these reasons is moral in nature- most lenders don’t want to be associated with a collection agency that uses tactics they consider underhanded, manipulative or actively insulting.

Yet there is a very good reason why a collection firm shouldn’t resort to acting in such a negative manner- thug tactics rarely work. The more a collection agency attempts to “squeeze” or threaten their debtors, the more that debtor will take increasingly drastic measures to avoid their financial responsibilities. A hefty loan is distressing enough on its own for debtors. Once you add on the constant threats and acts of harassment utilized by some debt collectors you create a negative situation of truly overwhelming proportions.

Considering the fact bullying collection tactics are both distasteful and ineffective, it’s surprising so many collection agencies continue to utilize them. The reason why most agencies stubbornly persist with these tactics is simple- they don’t know any other method to try out. Most collection agencies simply don’t have the training, the experience, or the imagination necessary to figure out a more effective, and less distressing, mode of closing their cases.