Hi, my name is Adam Stewart, debt collection expert and CEO-Operations Manager of ADC Legal-Litigation Lawyers.
Here is a tip for you about negotiating arrangements with your debtors.
In a lot of cases, the original debt amount is quite high and the debtor is unable to pay the whole amount at once.
This is your chance to let the debtor know you are on their side. The trick is to work with them, not against them. You need to let them know you are doing them a favour.
Start negotiations
Always start the negotiations with asking the debtor to pay in full. You never know your luck and you will never know if you do not ask, so always start the negotiations by making it clear to the debtor that you want payment in full. Then work down from there. The next best outcome is a reduced lump sum, which is often better than accepting a long, drawn out installment arrangement.
Assuming you have already been down this track, consider a payment arrangement. A payment arrangement is a privilege and has many benefits for both parties. Making an arrangement will result in cessation of interest, the preservation of credit rating and the avoidance of court action.
Locking in the arrangements
Once you have agreed on terms, give the debtor very clear instructions on when to pay, how much is expected and how to pay.
Put the instructions in writing to avoid misunderstandings. Make sure that the debtor agrees with the written document by confirming and signing.
Set firm deadlines for receiving the payment and establish consequences.
When the arrangements breaks down
If you find yourself getting excuses from the debtor, from they lost their job or bounced payments, be flexible. If the debtor calls in advance to inform you to change arrangements, put your guard down. However, if there is no notice from the debtor and the payment is very late, inform the debtor that the arrangement was not followed and advise them payment in full is now due. Start negotiations again from there. If the default once, they will default again, so be firm with them.
Outsource to a Collection Agency
If you don’t have systems in place to handle instalment recoveries, give them to an expert who can deal with them. Debt Recoveries Australia conducts credit collections and accounts receivables for corporations, businesses and sole traders. We collaborate with ADC Legal- Litigations Lawyers to provide a “one stop shop” for debt recovery and legal services. If you want to seek help or get free advice on how to recover debt from clients, please send an email to adam.stewart@adclegal.com.au or skype me at “debtrecoveries” or call us on 03 9999 1111. For more information, you may visit www.adclegal.com.au.