Why Dial-Only Collection No Longer Works

If you are using a dial-only collections strategy, then the method you are using is becoming less effective to collect payment from today’s typical consumer.  There are several reasons for this, and they all boil down to one fact: today’s consumer uses technology in different ways and all of that technology allows for more advanced ways of ensuring privacy.  

Not only do over 20% of people not even have landlines, an increasing number of people are using their mobile phones as their only means of telephone communication.  Federal and state regulations governing cell phone use is presenting itself to be a major barrier from the collections industry point of view.  What’s more is that cell phones offer caller ID and call blocking, with some new apps that completely block any calls from even registering on the phone.  These privacy options play a significant role in hampering access to debtors for the purposes of discussing debt resolution.

Additionally, both the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act have placed severe limitations on the use of automatic telephone dialing systems (or robocalling) and pre-recorded calls.  These restrictions have made it even more difficult for collection agencies to reach consumers by phone to discuss an outstanding debt.  

What this means for the collection industry is that new, multi-channeled ways of reaching consumers about their debt are necessary if successful negotiations are to be made.  Since technology is changing, the collections industry must change as well, and learn to use technological advances like online payment gateways allowing debtors 24/7 access to an account.  Giving debtors more ways to pay their debt, and alleviating the intrusion of phone calls, often has a greater impact on the actual repayment of that debt.  

In increasingly difficult economic times, more people are going to stop paying their debts.  It’s simply the harsh truth that the industry is facing.  However, adjusting debt collection practices to fit the needs and lifestyles of the consumers is a way to assure that debt collection takes place, rather than just a stream of unanswered, unreturned phone calls that wastes time and money. 

When Do You Need A Collection Agency?

Business owners are often faced with the enormous task of settling accounts and collecting on late payment or nonpayment. In times of economic struggle, this can be the most difficult part of running a business, but a necessary part if that business is to be a success.

 

Deciding whether or not to place your accounts with a collection agency is a likewise daunting task.  However, many analysts agree that financial problems show themselves in patterns, and there are particular signs you can look for to determine whether or not the timing is right to place an account with a collection agency.

1)      If a customer is fairly new, has had an account with your company for less than a year, and fails to respond to any invoices or statements that you send out, that customer should be sent to a collections agency as soon as possible.

 

2)      Your payment terms don’t work, regardless of how fair they are. If you offer reasonable payment terms (even for someone facing economic hardship) but your offers still fail to meet the customer’s ability to pay, then that customer might be playing games and might be determined to simply not pay.  If so, you should get rid of that account as soon as possible by handing it over to a collections agency.

 

3)      The customer starts denying responsibility for the debt.  When a customer begins denying that he or she is responsible for the debt, it is time to hand the account over to a professional. Without professional debt collection help in cases like these, the collection will be too time consuming and costly for your business to handle.

 

4)      The customer is getting separated, divorced, or has marital difficulties.  Debt problems almost always follow marital problems.  If you are aware that a customer has marital problems, it is best to send that account to a professional that will be able to handle the address changes, phone number changes, and financial instability that will likely follow for that account.