Best Debt Collection Practices India
Best debt collection practice:
The good companies are most likely to deploy best practice techniques in their debt recovery procedures. They were the most likely to approach customers with friendly and helpful staff, as well as providing easy payment plans for people struggling to pay debts. They were also most likely to make their charges clear and have all the relevant account information to hand when speaking to customers. It is very important to ensure that debt collection agents are equipped with the right tools and information. This could include what the charges are, where they’ve come from and all relevant account information to ensure the customer doesn’t have to repeat information and the conversation is as efficient as possible.
The most effective way to bring down the number of customers in arrears is to tackle the epidemic of time-poor debt. Therefore, regular reminders and soft multi-channel communications before bill issue are important, as is making the process of paying as easy as possible (often through a range of options – e.g. regular direct debits or online payment tools).
Keeping lines of communication open
Finding ways to make payments part of a regular dialogue with customers is advantageous. This is especially the case where a bill may be higher than the usual amount, giving customers the chance to make the necessary adjustments or alert you to the fact that they may have problems paying.
Worst practice – who takes a poor approach?
The most common poor practice was cited as inaccurate billing – aggravating the issue of protest debt. Reliable and accurate billing is a simple way to reduce the number of customers who enter the debt cycle and to avoid repeat contacts. Given the above findings around the reasons for debt and attitudes of the majority of customers, it’s also worrying to see high reported prevalence of overly aggressive debt recovery and people being made to feel embarrassed about their missed payment.
It is found during the course of recovery that the importance of making it easy to pay or, in the case where payment isn’t possible, to offer a realistic payment plan that acknowledges an individual’s particular circumstances. Although collections tactics may lead to a customer agreeing to a payment plan, it’s important to recognise that if it’s unrealistic it won’t be sustainable in the long term and could create repeat contacts and a bigger future issue.
The hidden cost of poor practice
While the aim of debt recovery is to improve cash flow in an efficient manner, there is a clear financial downside to many of the poor practices being employed. Customers on the receiving end of poor debt recovery procedures are more likely to switch provider and recount details of their poor experience to others. There is also evidence that poor practice hampers the recovery of the debt in question, with a significant proportion of customers saying that they would delay payment further to punish their company.
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