“Debt – An ingenious substitute for the chain and whip of the slavedriver.” – Ambrose Bierce
This is our first post in the series of the most frequently asked questions and answers regarding debt collecting.
Q How quickly can we collect money from a debtor?
A There is no one specific answer to this question. The outcome will depend on many variables: What are the Standard Payment Terms for the debt? How long had the debt been outstanding for (the longer outstanding the less chance of collecting)? Has the debt been chased previously and is there a record of the collection attempts? What kind of debtor are we dealing with? Is it a commercial debt or consumer debt? What is the financial situation of the debtor? Where is the debt being collected – different countries have different Debt Collecting regulations? Based on all of the above listed factors, some debts could be collected after few phone calls and e-mails, many after longer periods, and unfortunately, there would be a small percentage of debts that would not be able to be collected at all.
Q What if the debtor disputes the debt or refuses to pay altogether?
A When collecting debt you would have to provide the debtor with verification of the debt, which typically consists of the documentation initially provided to and signed by the debtor. You would provide a copy of the outstanding invoice, a copy of the original contract agreement/cost agreement signed by the debtor and it is advisable to provide him copies of all correspondence related to the unpaid account. Have all of this in place and ready before you contact the debtor, as often you would need to refer to these while initially discussing the debt with the debtor. If the debtor still disputes the charges, ask him to put the dispute in writing (for your record) and then reply to it officially in writing (needed if you continue the collection procedure in court). It is always a good idea to acknowledge the disputes (even if you do not agree with them) and try to negotiate the payment. If no resolution has been achieved, and you are sure that the debt is still legally fully payable, next step is to evaluate the legal cost involved to chase the payment through the legal system. In many cases the cost involved is higher than the cost of the debt, in which case you might consider offering a larger discount for a quick settlement. In many cases, even if you negotiate to get 50% of the original debt, this solution would still put you ahead in debt collecting.
Watch out for the upcoming Continuation of “Debt Collections – Frequently Asked Questions “ (Part 2)