Debt collection is a process of empathy as much as it is strategy. Any company collecting debts from its customers must understand the position each party is in and make it as seamless a process as possible to ensure everyone can focus on running a strong business.

A good strategy that uses the most effective tools and techniques will see you receive the money you’re owed on time and in good spirits, allowing you to foster stronger relationships with your customers.

Contrastingly, bad debt collection can lead to rocky relationships and overdue debts that can put your own business in hot water. Running out of debt collection ideas can also see you waste extra time and money on the process compared to more seamless strategies.

CreditorWatch helps businesses strengthen their debt collection strategies – more than 55,000 customers can attest to the ease with which we facilitate debt collection.

Our suite of debt collection tools allows you to automate debt recovery, strengthen the efficacy of payment requests, register payment defaults, and integrate with Xero and MYOB to streamline accounts receivables.

Simply including the CreditorWatch membership logo on customer-facing documentation has been found to increase chances of receiving payment by 53 per cent. The power of these tools knows no bounds.

In this article, we explain the importance of good debtor management, and teach you how to leave debt collection challenges in the past.

The ideal debt collection strategy

Good debt collection is customer-oriented, well communicated, technologically-enabled, and runs on a centralised system.

The best way to ensure your customers’ debts are paid on time is to make the process of paying them as easy as possible.

With consideration to the COVID-affected business landscape of the past two years, many business owners appreciate a sense of mutual understanding. As a creditor, it is important to maintain strong communication with your debtors, to give them the best opportunity to get on top of their debt.

To help you streamline debt collection, you can integrate your Xero or MYOB accounting package with CreditorWatch, enabling you to get a clear overview and quickly identify the risky debtors on your books.

But before you’re even called upon to deal with problematic payers, we will send automatic reminders to your customers, removing the need for you to send countless texts, emails and phone calls. This saves you a significant amount of time, energy and resources.

These automated reminders help to ensure your customers get on top of their debts. Instead of forgetting what they owe and (never) paying the price for it, they will be made aware of their payment obligations.

A key aspect of a successful debt collection strategy is a having detailed insights about your debtors. This comes in the form of CreditorWatch’s DebtorLogic tool, the single source of truth for debt repayment records, risk analysis, and all the debt analytics you could need to run your business. This interactive trade payment program analyses your aged-trial balance (ATB) to reveal your debtors’ payment trends and determine their likelihood of paying an outstanding amount. It helps you prioritise your collections, reinventing the way you collect payment. 

Your team will thank you for using CreditorWatch’s industry-leading solutions to streamline your debt collection strategy.

Debt collection: Dos and don’ts

Debt collecting agencies can get a bad rap for being annoying or harsh because they attack their debt collection duties in the wrong way. These callous tactics should be avoided at all costs, or else you may risk losing out altogether. Lawsuits can ultimately become more costly than chasing debtors and this is exactly what CreditorWatch’s tools are designed to avoid.

Simple errors like contacting companies who’ve already paid their dues are an obvious one to avoid, but have you considered more complex considerations like why the debtor hasn’t held up their end of the deal?

As we’ve discussed, there’s a certain level of empathy that must be applied to debt collection or else you risk losing your customer for good.

Sometimes a late payment can be for reasons as simple as: they forgot; they thought they had already paid; they’ve been sick and off work; or there’s an unrelated dispute with their accounts.

Open communication from both parties is the key in these scenarios, but the method should be tactful.

Phone calls may seem like the most direct and effective way to reach your debtor and get them in line, but recurring calls can sometimes lead to annoyance, blocked numbers, and lost business.

Try an omnichannel approach by starting with emails, using CreditorWatch’s personalised letter templates. We offer professional templates for every stage of the collections process, to help you clearly communicate payment terms and strengthen payment requests.  You may then move onto text messages, and then phone calls to drive home the point with unresponsive clients.

The timing of these interactions is just as important as the channel.

Manage your riskier debtors by getting onto them earlier and sending them reminders for any upcoming payments, providing any helpful information that could make the process easier for them. Even though they’re the ones owing you, offering that extra bit of value will go a long way in receiving your money.

If you haven’t received a response after a week, consider moving to another approach until you find a strategy that works. Not every customer will respond in the same way to each method, and your understanding of this is vital to making them feel like a valued customer.

By making your debtors feel valued, they’ll be more likely to clear their debts and maintain good relationships with you, so any personalised touches you can include in your interaction with them are recommended.

Taking all of these do’s and don’ts into account should hold you in good stead to manage on your own without having an accounts receivable management collection agency to rely on.

Get in touch for a free demo

Stay on top of your debt management and streamline your strategy with CreditorWatch’s debt collection tools. We help you take the stress out of these arduous tasks and leave your business to do more of what it does best.

Contact us today for a free personalised demo and learn how to strengthen your debt collection efforts.