Debt collection is a difficult business. Most businesses chase late payers in house, and only pass debts on to a collection agency once they’re classed as bad debts. Debt collection agencies often deal with a large number of debtors that owe money to a wide variety of companies. This means they have to send out a lot of communications in order to reach the people that owe money, and start the collection process.
Some debt collection agencies purchase “bad debts” for a small percentage of the amount owed. The company that the money is owed to does not expect that the full amount of the debt will be paid off, so they are willing to sell the debt for a small amount of money. The collection agency will pursue the debt, and may offer the debtor the chance to settle the debt by paying, say, 25% of what they owe. If the agency purchased the debt at just 5% of the original amount, this is still a nice profit for them.
Multiple Communication Methods
Most debt collection agencies begin the collection process with a form letter. They use the same basic form letter to initiate communication with most debtors, and will then follow up with other letters depending on whether the debtor responds by making payments, attempting to start up an arrangement, ignoring the letters, or denying the debt.
Telephone calls and doorstep visits are other popular methods for chasing debt collection. If the debtors telephone number is known, then phone calls are often initiated at around the same time as letters are sent out. Doorstep collection tends to happen later in the process, although the policy can vary from agency to agency.
In recent years, bulk text messaging has become a popular option for some debt collection agencies. Some debt collectors now use a business text account that allows them to send bulk text messages to debtors. These messages can be automated, and different messages can be sent to different debtors, ensuring that each person gets the message that is applicable to their circumstances.
Technology and Collection
Modern business text services are quite sophisticated, and some collection agencies can use Interactive Voice Response systems in addition to their SMS strategy. This means that a debtor can act upon a text message by dialling the number they have been given, and making a payment automatically. Once their payment has been accepted, they will be added to a “kill list” which means that no more bulk text messages will be sent to them. This improves the experience for the debtor, and reduces the number of complaints that the agency receives.
Of course, there will always be some people that either cannot pay, or will not pay, and there is little that agencies can do about those debtors, especially if the debt is small enough to make it a waste of time to go to court. However, for people that have simply fallen on hard times, but that do wish to settle their debts, partial settlements and discrete, sensitive collection agencies can be a good thing.