There will always be two sides to a coin. If you own a firm and you are going after a delinquent payer, you generally have two choices namely: sending a collection letter or giving them a call. Each choice has its own pros and cons. What's crucial is that you are aware of the pros and cons so that you can make an informed decision as to which debt collection approach would fit your business's requirements.
Initially, it is crucial to define the distinction between collection calls and collection letters. Collection calls are when you hire your own staff to collect on delinquent payments. If your firm is still tiny, you can hire a business that provides debt collection services for a minimal fee. If you truly want to go huge-scale, you can outsource to a debt collections firm that is based overseas. Several firms are already hiring foreign workers because of the more affordable labor expenses and the greater results that they get.
Collection letters are letters that you can send off to your customers yourself or you can also employ an external business to print and distribute collection letters to your buyers. Handing out collection letters is less costly than collection call costs. There are two types of collection letters. There's the ordinary notification letter that will notify consumers of their late payments and the amount due. Then there's the action letter or final letter of demand that would inform your delinquent customer that you will be taking action against them for non-payment of their debts.
Pros of Collection Calls:
- Actual time feedback is achievable because a representative would be able to inform the delinquent customer about the unpaid balance. The representative can also get an update if the payment was already made. Representatives from the debt collections agency could also have the power to make negotiations and produce a win-win situation for each the client and the debtor. Immediate payment may result in the course of the collection call.
- Collection Calls can be outsourced which means that it would not be too much of an economic burden to the company to employ an external organization to deal with their debt collection issues.
- Ideal for organizations who want quicker collection results. Collection calls can reach several customers per hour compared to collection letters which may be limited to the rate of distribution per day. Collection letters distributed might not necessarily be read. But collection calls are significantly quicker at informing consumers of their unpaid balance.
- Follow up calls can be completed in case the debtor is willing to negotiate and willing to work on how more ideally to pay off an existing debt.
- Has personalized service in contrast to collection letters that are impersonal and really business-like.
Cons of Collection Calls:
- Some debt collection agencies might charge high fees.
- Unprofessional debt collectors could harass and intimidate the debtor to the extent that the debtor files legal action. There are instances that some debt collectors become too aggressive and call the debtor late at night or early in the morning which could tremendously alienate and inconvenience consumers.
- The good results of payment could depend on the phone debt collector's attitude and professionalism.
Pros of Collection Letters:
- Less expensive costs as it can be automated (sent by the business themselves) or can be distributed through a debt collections agency.
- Easy and direct. Much less intimidating for buyers.
- A greater choice if the customer is not at property most of the time.
- Unprofessional debt collectors may harass and intimidate the debtor to the extent that the debtor files legal action. There are instances that some debt collectors turn out to be too aggressive and call the debtor late at night or early in the morning which could greatly alienate and inconvenience clients.
- The success of payment could depend on the telephone debt collector's attitude and professionalism.
Cons of Collection Letters:
- Slower rate of distribution.
- Might not be updated. Debt collection can't be updated actual-time. Collection letters could come out late and not updated as payment has already been made
- When a debtor has had a change of address the letter can't reach the intended recipient
- Impersonal and organization-like
- Will not encourage immediate payment as payment particulars can't be delivered over the phone.
- No way of truly knowing if the intended recipient received the collections letter.
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