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Effective Tips For Debt Collection Post-COVID-19 Pandemic

No company can do without debt collections. This part of any business landscape is critical and laborious. It requires tons of research and analysis to master the art of negotiating and understanding what exactly needs to be done in order to handle delayed payments correctly. The coronavirus outbreak made this job ten times harder considering the big hit the economy has taken. People are losing their jobs and drowning in debt. This harsh economic reality is not only putting consumers in a sensitive place but also businesses and those who have to deal with the aftermath. Since this unprecedented challenge requires some major changes in collection practices, here are 8 effective tips to consider.

1. Being Prepared

Contacting delinquent customers without having all the information needed about their financial status, circumstances, and late invoices is the worst thing any debt collection agent could do, especially in this current economic climate. Before making the call, debt collectors need to do their best in collecting all information needed to manage to speak professionally, personally, and knowledgeably with customers.

2. Identifying the Vulnerable

The market data has shifted dramatically since the beginning of the pandemic. Credit bureaus need to dig deeper to collect all data necessary to differentiate between habitual collection customers and those who have been affected by the current economic state resulting from COVID-19. The importance of studying why customers are falling behind on their payments is explained in this article thoroughly as an essential part of better debt collection practices. Understanding the true degree of risk is not possible without enough information that clarifies customers’ financial morality, how reliant they are on credit stability, and credit stress.

3. Handling the Tactical Phase

There are three collections phases related to the pandemic. The tactical phase is identified within the first 90 days of debt. In this phase, the correct approach is capturing all essential data to ensure that coronavirus is the main reason behind the delinquency. This will not only help in showing that near-time relief is inevitable, but it will also help in framing the needed timeline.

4. Excelling the Mid-Term Phase and Long-Term Strategies

Segmentation and communication in this phase should be handled differently. In the second 90 days as payment holidays are about to expire, customers tend to reach out to negotiate the right options for them. Validating affordability is crucial at this point to be able to make the right decision between following the standard procedure or shooting for longer-term forbearance arrangements.

Anytime after 180 days requires a long-term strategy to handle customers, especially those who are suffering from pandemic-related financial struggles, or health issues.

5. Avoiding Assumptions

Assumptions are debt collectors’ worst enemy. When assumptions are set in stone, the tone of voice will inevitably get affected. Mastering the right tone of voice is an art. You need to balance between being firm without alienating the customer nor siding with them. Sounding too soft might push the customer to neglect to take their delinquency seriously. Using a non-friendly, harsh tone of voice might result in a defensive customer that isn’t willing to cooperate. Sounding friendly and caring, yet detached at the same time will impact how successful the conversation will go.

6. Staying Composed 

This job puts you in a confrontational position with all types of people. However, a smart debt collector understands how confrontation and manipulation should always be avoided. Take into account the possibility that this might be a potential customer in the future. So, make sure not to drive them away with foul play.

7. Being Considerate and Attentive

The customer you are calling might be suffering from many issues that go way beyond debt. Being considerate plays a huge role in how your conversations will go. Make sure to listen to the reasons the customers are giving. Even if they are throwing the blame on someone else, you shouldn’t dismiss this possibility. You must confirm these claims by making a call for said person.

8. Fighting Harassment

While you should always maintain a professional and understanding tone of voice, it’s still essential to put a stop to any building anger or aggression. If the customer starts throwing threats, the best possible approach is arranging a callback. Staying calm even if the debtor is becoming abusive during the call can help greatly in keeping the dialogue constructive as much as possible.

Covid-19 is forming an unprecedented challenge for all businesses. It has the whole world in its grip. Successful debtors are in a more critical position when it comes to handling their job roles. While you should always be understanding and considerate, you still need to get your job done. Striking this balance is something that requires research and practice, so make sure to handle these situations with patience.

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