Proven Techniques Driving Effective Bank Debt Recovery
Banking institutions are having more financial troubles in today’s economy, and a growing number of charge-offs and delinquent credit accounts do nothing to aid the situation. Taking steps to implement sound lending policies helps, but most banks still find themselves pursuing collections.
Using an outline of procedures that is targeted to the bank debt recovery effort can assist in effective collections. Having such a clear-cut set of procedures can help avoid many of the most common mistakes in bank debt recovery.
Putting off the internal bank debt recovery process too long will only harm the potential for recovering greater percentages of the debt owed. Contacting the debtor early allows you to be kinder and more congenial in your collection efforts, which aids in maintaining a better relationship with the client, therefore achieving greater success than with harsh demands.
Also, by contacting the debtor early in the account’s delinquency, bank debt recovery is more successful because the debt is placed at the head of the collection line. It is important to remember that most debtors with one delinquent account have multiple collections in process. Waiting to start collections allows other debts to be placed in line ahead of your own for payment.
This, however, is not the only mistake internal collections departments make. Often, a lack of frequent, continuous contact leads to a loss of bank debt recovery. Waiting too long between contact attempts opens the door for forgetfulness, as well as allows other collectors to make their calls and achieve their goals.
If you are calling clients with friendly reminders every three to four days, your results will improve based on continuous, diligent efforts and the building of a regular relationship with the client. Good attitudes go a long way in bank debt recovery.
The final problem facing most banks is a failure to follow up on promises. Just because a client claims they will make the negotiated payment doesn’t mean it will come through, especially given multiple bank debt recovery efforts and a tendency to become busy and forgetful. Frequent follow-ups assure the payment doesn’t slip the debtor’s mind or fall through the cracks in payment efforts.
Many banks don’t have the resources to pursue delinquent debt effectively. However, outsourcing bank debt recovery efforts can be lucrative. Determining the ability of the business to pursue their own debts will help to build a successful strategy of debt pursuit.