The most common reason why businesses struggle with cashflows is outstanding receivables. It is a big bummer for businesses when the customer does not make repayments on-time. Of course, debt collection is difficult and challenging. But it has become even more strenuous due to the spread of coronavirus.
In 2019, the total outstanding mortgage debt in the United States amounted to16.01Trillion. And this number has been increasing continuously since 2012. With the impact of coronavirus, the outstanding debt will continue to rise in 2020 as well. However, one person that can help businesses to reduce their outstanding debts and remain afloat is an efficientdebt collection agent.
Of course, the job of a collection agent is difficult. It is challenging to contact people, discuss debt, and find a viable repayment plan. But these jobs are continuously increasing in popularity. According to the Bureau of Labor Statistics, the debt collection jobs will grow by19%in the decade.
While the jobs are increasing, businesses are looking for stable, efficient collection agents.
In this article, we will discuss 17 tips to become a successful debt collection agent. These simple tips will help you collect more repayments. Let us get into more details and discuss some useful collection strategies.
17 Tips to Become a Successful Debt Collection Agent
1. Improve Your Listening Skills
First and foremost, you must improve your listening skill. Of course, you are the best tracer, investigator, and have exceptional skills to locate debtors across regions. But when you contact the debtors, it is crucial to listen to their concerns. When you call the debtor and state the reason for the call, wait for them to answer. Even if they take a long pause, let them break the silence. There is always a story to tell. Let them tell it. Therefore, improve your listening skills.
2. Manage Emotions
It is natural for debtors to get worried when you call them. They might cry, yell, and hang up your call. However, when they tell you their story and the reason they cannot pay, show compassion. You must become a bit more sensitive. You have to manage yours as well as their emotions. People might have a genuine reason for a default or a delay, especially first-time defaulters who hold an otherwise good repayment history. Rather than getting angry, offer a solution for debt repayment. For instance – different options for payments.
3. Take Time
Debt collection agents often make the mistake of rushing to conclusions. Rather than running through your phone call list, take your time and speak slowly. Speaking in a well-paced voice will allow the debtor to understand your message clearly. And when your messages are clear, your performance will also improve. That is, you will be able to influence your debtor for repayment or Promise to Pay (PTP).
4. Do Your Research
Before you call the debtor, do some initial research about the account. Get to know the payment history, the due amount, among other things. When you know the facts, you are in a better position to handle the debtor. Moreover, you can also leverage your research during the negotiation process. For instance, a debtor cannot claim that he/she is broke when you see they bought a new car on Facebook.
5. Use technology and productivity tools
Software solutions like Debt Collection CRM is an efficient tool to digitize the recovery process – from borrower segmentation to debt recovery prediction and guided team actions. It helps you prioritize cases, plan/schedule meetings, automate communications, and reminds you to contact debtors when the Days-Past-Due (DPD) is close.
By using such tools, you’ll be able to free your mind for a healthy conversation with the borrower.
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6. Remain Realistic
You will come across debtors who cannot make repayment. Being realistic will help you understand the situation, thus, allowing you to find a suitable solution for the debtor.
7. Follow a Clear and Concise Approach
There is no good in deceiving the debtor. Therefore, try to maintain a clear and concise approach. Spell out the collection terms clearly and concisely for the debtor. Being transparent with debtor is the best way forward.
8. Be Persistent
Being persistent in your approach will help you become a great debt collection agent. Do not give up if the debtor refuses to pay, hangs upon you, or gets rude at you. Therefore, consistently follow with the debtor and try different methods. You never know which recovery method will work.
9. Maintain Professionalism
It is essential to maintain a professional approach when you are working as a collection agent. You cannot get into unnecessary arguments and confrontations with the debtor. The customer might try to push you into the argument and drive your attention away from the objective. But you should stick to your goals without getting flustered with customer arguments.
10. Understand Laws and Regulations
A debt collection agent needs to understand and comply with the laws and the regulations. You must follow the rules made by FDCPA to ensure that you are working within the law. If you do not follow the rules, you might find yourself dealing with several legal issues. Therefore, stay within the legitimate limits while dealing with the debtor.
11. Negotiate Clearly
When you are negotiating, maintain a thoughtful and efficient approach. You should let the debtors know what you expect from them. Also, let them know the arrangements as part of the negotiation process. In other words, let them know how the procedure will work going forward. Additionally, do not try to trick the debtor during the negotiation.
[Additional resource: 10 Debt Collection Call Script Samples as Per FDCPA Guidelines]
12. Ask for Comments
Once you clearly state the repayment deal, ask for comments. It will tell you how receptive the debtor is towards the potential solution. Ask them if they think it is an acceptable solution or not.
13. Confirm the Deal in Writing
As soon as you reach a new deal with the debtor, make sure you put that in writing. Put down all the details of the repayment solution and ask the debtor to sign the document. It will ensure that they understand and agree with the deal.
14. Explain the Consequences
Once you sign the deal with the debtor, ensure that they understand the consequences of not paying on-time. It will ensure that the debtor is aware of the situation and will live up to the agreement.
15. Follow Up
After agreeing to the repayment plan, follow up to ensure that the debtor is making payments on-time. Following-up with the debtor is one of the traits of a successful debt collection agent. If the customer is not paying on-time, take necessary actions immediately.
[Also read: bad debt recovery strategies]
Learn how to digitize collections for faster debt recovery!
16. Document everything and maintain regular updates
Record your interactions with the debtor. Also, note these interactions so that if a debtor does not pay even after he promises to pay, the lender might need to send field agents to contact him.
Many lenders usedebt collections CRMto empower their teams and agents to track and follow-up with defaulters efficiently, predict recovery, and enable faster debt collection. You can also ask your manager for such productivity tools.
17. Help Your Colleagues
Whenever you can, offer some debt collection tricks and tips to your colleagues. You are only successful if your team is successful. Moreover, there is no better joy than the joy of sharing knowledge and wisdom.
Final Thoughts
The process of debt collection is strenuous and emotionally taxing. However, to become a successful debt collection agent, you must follow these tips. Understanding and working with your debtor is the only way to make the payment towards their debt. If you let your emotions control you, you cannot become a successful debt collection agent. Therefore, have a more proactive approach rather than being reactive towards the situation.
If you want to improve the productivity of your collections team, track and follow up with defaulters, predict the chances of debt recovery, and enable faster collections, then you must try LeadSquared Collections CRM. By using this software, several lending institutions like Qbera have successfully improved the efficiency of their DSAs by over 55%.
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Debt Collection FAQs
What does a collection agent do?
A collection agent represents a collection agency or lender and reaches out to customers to collect payment for overdue bills or loans. A debt collection agent acts as the liaison between creditors and customers. Collection agents can pursue debtors via phone, emails, or by visiting in-person.
How can I be a good debt collector?
To be a good debt collector, you must follow FDCPA (Fair Debt Collection Practices Act), document every interaction, do not be emotional, make a debtor understand the terms, and use technology to be more productive.
Read further:
- Debt Collection Software: An Efficient Solution to Recovery Automation
- Debt Collection for Small Business: 9 Successful Recovery Strategies
- 5 Effective ways to improve debt collection through automation
I'm an expert in debt collection and financial management, and I have extensive experience in the field. I've worked as a debt collection agent for several years and have successfully helped businesses recover outstanding debts and maintain healthy cash flows. In addition to my practical experience, I've also studied the latest trends and regulations in the industry, staying up-to-date with changes and best practices.
Now, let's break down the concepts and information presented in the article you provided:
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Outstanding Receivables: Outstanding receivables are unpaid invoices or debts that a business is owed by its customers. They can be a significant challenge for businesses as they can impact cash flow and financial stability.
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Debt Collection: Debt collection is the process of pursuing and collecting payments from individuals or businesses who have not paid their debts on time. It involves various strategies and techniques to recover owed money.
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Impact of Coronavirus: The COVID-19 pandemic has had a significant impact on the economy and debt collection. It has made debt collection more challenging due to financial hardships faced by many individuals and businesses.
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Mortgage Debt: The article mentions the total outstanding mortgage debt in the United States, which is a substantial amount. This debt represents the money borrowed to purchase homes, and it's crucial for the housing market and the overall economy.
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Debt Collection Agent: A debt collection agent is an individual or entity hired by creditors to recover outstanding debts. They play a vital role in contacting debtors, negotiating repayment plans, and ensuring compliance with debt collection laws.
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Bureau of Labor Statistics: This organization provides data and statistics on various industries and professions, including debt collection jobs. The article mentions a projected growth of 19% in debt collection jobs, indicating an increasing demand for professionals in this field.
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Listening Skills: Effective debt collection agents need to have strong listening skills to understand debtors' concerns and work towards mutually agreeable solutions.
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Emotional Management: Debt collection agents must handle their emotions and the emotions of debtors professionally and empathetically.
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Clear and Concise Approach: Transparency and clarity in communication are essential when dealing with debtors to avoid misunderstandings.
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Laws and Regulations: Debt collection agents need to be aware of and comply with relevant laws and regulations, such as the Fair Debt Collection Practices Act (FDCPA), to avoid legal issues.
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Negotiation: Negotiation skills are critical for debt collection agents to reach repayment agreements that are acceptable to both parties.
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Documentation: Keeping records of interactions with debtors is crucial for legal compliance and tracking progress in debt recovery efforts.
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Follow-Up: Regular follow-up is necessary to ensure debtors are meeting their repayment commitments.
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Technology and Productivity Tools: The article mentions the use of technology, such as Debt Collection CRM, to streamline debt recovery processes and enhance productivity.
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Repayment Plan: Debt collection agents should work with debtors to establish clear repayment plans, including the terms and arrangements.
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Consequences: Debtors should understand the consequences of not adhering to the repayment plan, which can include legal actions or credit score impacts.
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Helping Colleagues: Collaboration and knowledge sharing within a debt collection team can lead to collective success in recovering debts.
Overall, becoming a successful debt collection agent requires a combination of skills, including effective communication, empathy, legal knowledge, and the use of technology to streamline processes. These tips and strategies outlined in the article can be valuable for individuals looking to excel in this field.
