Since the economic downturn of 2008, more consumers who had been financially stable have faced the unexpected reality of being financially overextended without a plan on how to address the problem. Whether the 2008 crash was a dip, recession, or depression doesn’t matter. The economic downturn created an explosive expansion to consumer’s nationwide debt, and what does matter is you didn’t have a plan on how to respond.
As a business, deciding how to proceed with your loan recovery process is just as important as bringing your accounts receivable back to within acceptable boundaries. So before your company launches an aggressive collection strategy, pause and consider why your customers are in debt leading to deeper financial trouble, and use these guidelines to help you pick a nationwide debt recovery agency.
When the economy slid into recession in the end of 2008, many consumers were unprepared. Their home financial picture was solid, but was based on the amount of money they had coming in on a weekly basis. In the middle of successful careers, your customers didn’t intentionally pursue a path to financial trouble. The economic downturn caught them by surprise.
Consumers get into financial trouble because they don’t operate their home on a budget, and don’t have an emergency fund. Starting a budget takes time, planning and work. Making a successful budget requires following up and monitoring your plans, and reviewing financial details at the end of every month in addition to writing a budget for the next 30 days. Most consumers don’t want to create a budget, or don’t have the expertise or the patience to master this level of financial details.
Without a budget, consumers rely on their income stream to create a manageable budget for them. Because money is always coming into the pipeline, consumers are able to manage what they are spending with relative ease. As long as the income is roughly equal to the outgo, the average consumer feels comfortable with their financial management.
Other homes build their financial plans based on overtime pay, money received over and above their regular wages. An extra $200 dollars a week in overtime pay is nearly an additional $1000 dollars every month. When a family makes their purchase decisions and future financial commitments based on this level of additional income, they are in a position to suffer immediate financial turmoil if the overtime work stops.
According to Yahoo Finance, four out of the five reasons consumers experience bankruptcy are connected to unexpected financial expenses and job loss. Only one of the top five reasons is related to intentional misuse of money and credit. (http://finance.yahoo.com/news/pf_article_109143.html)
When your company has to collect outstanding delinquent receivables, in many cases your customers aren’t trying to intentionally defraud your business, or back out on their commitments. The majority of your overdue accounts receivable are just as embarrassed as being overextended as you are about having to call and ask for their payments. When you approach your delinquent customers with this understanding, it’s much easier to extend a compassionate tone.
Therefore, when you have to collect debts, make sure you use a company that is both professional, compassionate, and knows the legal boundaries of your state. When you pick a company that respects your clients, you enhance the image of your organization. When even severely delinquent accounts receivable are managed with gentle professionalism, you can expect better result, and your company will maintain your relationships with your customers and your reputation in the marketplace.