A Handful of Tips 86 – Bad Debts

A Handful of Tips 86 – Bad Debts

The five best tips to help collect bad debts 

Collecting bad debts can be difficult and often messy.

The collection process goes through distinct stages. Always put your requests in formal letters and keep copies of the letters you send.

The first two letters you send should politely assume the customer has overlooked payment and will pay when reminded. The third letter can ask for an explanation of the circumstances that prevent payment. If there is no satisfactory explanation it is time to take further action.

1. The reminder letter

Assume the customer has overlooked the bill.

“This is a friendly reminder that your account is overdue.” 

2. Strong reminder

Assume the customer has overlooked paying.

Be polite and reassure them that credit is still available. “You may have already paid. If so, we thank you. We look forward to an early response. ”

3. Enquiry stage

Assume there is a good reason why the customer has not paid. Try appealing to their pride so they avoid the embarrassment of a bad credit record.

“Please contact us immediately if you find you are unable to pay. Together we should be able to work something out.”

4. Urgent stage  

Be demanding and impress on the customer the seriousness of the situation.

Point out what the customer has to lose if the bill is not paid. Imply the possibility of legal action or the problem being referred to a debt-collecting agency.

5. Legal action        

If the customer has refused to co-operate, put the claim into the hands of the small claims court for a hearing.

From your records you will be able to supply copies of all your communications to support your claim.  

-Geoffrey 

“Keep your demands brief, to the point, factual and easy to read.”

 

SOURCE: “Persuasive Ways” published by Moss Associates Ltd, New Zealand and in Chinese by Shanghai People’s Publishing House and as “Secrets of Persuasion” by Cengage Learning Asia. Also available as an e-book from Amazon.com.

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