The collection process is infamous in both business and everyday life as one of the most frustrating hassles one can be involved with. Whether you’re trying to collect or someone is trying to collect from you, it’s always a tough process that spurs irritability and frustration. But as far as collecting goes, there are ways to improve the process and make it easier for your company, either by reducing the effort it takes to collect, or cutting down on the time it takes to collect money you are owed. With the right strategies you can often do both, and the top strategy for achieving that is proactivity.
What is Proactive Recovery?
Proactive strategy is the art of solving problems before they are even actual problems. Not only does the art of prevention make short work of issues that many businesses suffer from when they try to collect invoices and debts, but they are often less costly than rectification practices as well. Thankfully there are many proactive strategies to use in the collection process to optimise it.
The whole point or proactive strategies is to manage clients carefully before they are ever late on a debt. If you are careful about increasing the likelihood of a client paying, you’ll be more likely to avoid debts and late invoices at all.
One of the best ways to make sure that happens is to educate the client prior to disbursement. The more a client knows about the situation they’re getting into, the better. Having your clients be informed beforehand has a significant impact on reducing default rates, if only because the people who know what they are getting into and still do are more likely to follow through with their obligations.
Informing, informing, informing
This means informing the client of everything they need to know, such as the implications of getting a loan, how the product they are purchasing works, what the benefits for them would be if they pay on time, and what the payment schedule is like.
Another valuable proactive strategy is to address customer complaints as quickly as possible. Disgruntled customers are far more likely to default on payments, all the same as satisfied customers are more likely to pay on time. This is especially true if the customer is offering a valid complaint that has something to do with your product or your process, in which case you are practically obligated to rectify the issue. The less people complain about your company and the more they like about it, the more likely it is that they’ll put in the effort to pay their debts on time.
And of course, positive reinforcement is always an effective strategy. People like rewards, and rewards can often be more motivating than consequences. If there’s a good reason to pay on time aside from avoiding late fees, such as immediate renewal, clients will be even more likely to pay their debts on time, making positive reinforcement a truly effective proactive technique for your company’s collection process.