The advantage of fair debt collection practice in India



It is commonly known fact that that individuals from all walks of life, income types and ages fall into debt at some point and that they have a many reasons why they have missed a payment, many of which can’t be attributed simply to lacking the funds to pay – such as forgetfulness, inaccurate billing and protest debt. Therefore, a one-size fits all approach to debt collection is not fair, nor effective; a tailored approach to collections is what is most effective way of debt collection.
One thing is of the most importance i.e. transparent and regular communication, and how if done correctly, this can lead to both debt avoidance and debt collection. Early intervention and regular reminders have a key role to play in mitigating some of the reasons behind debt; but only where customers are cooperative.
Others, debtor in arrears to be offered multiple channels of communication is essential. Preferred contact channels differ hugely between customers, so to effectively engage customers and achieve the best outcomes debt collector should offer channel choice.
The importance of getting collections right is something which simply cannot be ignored by the debt collector. Increased loyalty, repeat business, and more prompt payment can be expected if debt collection is done fairly. If not, companies will lose customers, reputation damage and delayed payment.
Finally, debt is always going to present businesses with a challenge. But this doesn’t mean debt collectors sacrifice company’s reputation and customer relationships as a result. Understanding each customer’s circumstances, implementing tailored solutions, adopting a customer service mind set and keeping lines of communication open can result in both a reduction of bad debt and satisfied customers.  Debt is just another part of the customer journey – and it’s essential that organisations recognise this.
The importance of a flexible approach 
It is found that many of all debt is cleared immediately, as soon as persons are reminded to pay. However, for those instances that require further communication, it seems that a variety of methods need to be deployed to engage customers effectively. While the majority of people say they will react best to a telephone call or letter, some prefer either email or SMS, especially if these advise the payment method.   Therefore it’s both important to offer a range of communication channels and to also look at customer profiles in order to deploy the best techniques. For example, dialling a customer who works full time during office hours may simply end up agitating them – text or email may be a better approach.
When it comes to doorstep visits, Trustman carried out further analysis of collections efforts through visiting customer. Of those persons visited many time made immediate payment or agreed a payment plan. Other persons in circumstances of vulnerability and therefore in need of further support and assistance, highlighting that a great deal of care needs to be taken when undertaking such collections. Door step collection is often used as a last resort. However, it can be extremely effective earlier in the process in terms of customer engagement and affordability discussions. These face-to-face visits also provide an effective opportunity to deliver other customer-facing services at the same time, such as meter reads. 

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