How to persuade your debtors to pay up?
Going after debtors is a challenging task. Although you are in desperate need of your funds, you also need to tread softly so that you don’t jeopardize the relationship between you and the debtor. Forget the idea or belief that debt collection needs to be messy. While it’s important to exercise caution while lending money to people, you also need to be careful in persuading your debtors to pay without going the bad cop route.
Here are 10 tips that you can employ to persuade your debtors to pay.
Make sure that loans and debts are guaranteed
Before you lend anyone money, make sure that such person has a third party. The third party must guarantee that the debt will be paid in case the debtor is unable to pay the debt. This will go a long way in ensuring that the loan is safe and will be paid back. This kind of arrangement will give you the assurance that the guarantor will pay even if the debtor is unable to pay.
Give debtors the freedom of choosing repayment plans
Debtors can be encouraged to pay their debts on time by giving them the opportunity to choose the payment options that suit them. You can provide about two or three different options and allow them to choose the one they find very convenient and/or comfortable.
Offer an attractive deal
You need to make use of a carrot-stick approach when dealing with debt collection. One of such approaches
Discourage late payments
Do all it takes to discourage
Have a deadline
You need to have a deadline for repayment of debts. You can then begin pursuing your debtors after the deadline lapses. Ensure you discuss this deadline with your debtor. Doing so will encourage them to pay on time within the limit of the deadline.
Threaten to inform credit bureaus
Keeping a clean credit record is essential in maintaining a good credit. Debtors are aware of this and they understand that a poor credit rating will hinder them from many opportunities in the future. A poor credit score will prevent them from securing loans or mortgage as well as business investors. Thus, you can threaten an unresponsive and unwilling debtor that you will report him or her to credit bureaus. You might begin to get some response when this tactic is used.
Be persistent but patient
While it is important to be persistent about collecting your debts, patience should also be exercised. Debtors have quite a number of reasons why they are unable to pay their debts. You need to be patient with your debtors until you are certain that you’re dealing with an unrepentant and a chronic debtor.
Allow debtors to settle debts through assets
You can also accept assets in place of cash when your debtors are unable to pay. Some debtors may be unable to afford cash but may have assets that may worth the amount that they are owing you. Although most debtors may not be willing to replace their debts with their assets but you need to encourage them by making them aware that you’re ready to accept their assets in place of cash.
Call the debtors at the right time
If you have your debtors’ phone numbers, which I suggest you need to have, call them to ask for payments. However, ensure you call them at the right time when you know they will be able to attend to your calls. If you are unable to reach any of your debtors on phone, you can leave them voice messages.
Hire a debt collection professional
You can also hire a debt collection expert. Debt collection experts have the skills and expertise needed to collect funds from debtors. When you hire a professional, you don’t need to get involved in the stress of running after your debtors.
There you have it. Top 10 tips that can help you to encourage your debtors to pay their debts. Do you have any comments or inquiries? Feel free to reach out to us for a non-obligatory chat.