Tactics and Strategy of Debt Collection

Debt Collection

In Western scoring techniques, there is a term: Collection scoring (scoring for working with overdue debts), when on the basis of a certain list of indicators it is determined when and what measures should be taken in relation to problem debtors. Before starting any collection procedure, you should determine the tactics and strategy, plan of measures, and specific actions with terms, tools, costs, responsible persons, and the expected effect. The plan is built according to the specific situation.

What Is a Debt Collection Strategy?

Debt collection strategy is a set of key goals and the main methods of achieving them, reflecting the real possibilities of the collector in the objective internal and external conditions of the collector.

Debt collection tactics involve solving more specific tasks at a specific stage of strategy implementation, for example, a sequence of calls and meetings.

Sometimes the loan debtor only delays time in order to remove the property, and in this sense, 30-60 days of deferral is just enough for him to arrange everything. In another case, it is advisable to wait 100 days if the debtor unambiguously repays the debt, for example, receives maternity capital, a subsidy, or money from the debtor whose property was found and put up for auction.

However, the constant calls sometimes are annoying the debtor so much that he exclusively for the pressure pays back the loan on his/her own. At the same time, if at the Soft stage the debtor is open for communication, it can give valuable information about his property, then upon filing a claim for one debtor, this will be an unequivocal reason for the voluntary return of the debt, for another it is a signal to the beginning of an aggressive opposition policy.

What Can Be the Reasons for the Repayment Delay?

For a lender, the only thing that matters is getting money. Therefore, is there any point in waiting for the six months delay in order to go to court? It's imortant to select the sequence of stages and provide analysis of the causes of delay.

The reasons for the delay can be many:

  • technical delay (related to problems with payment discipline, forgetfulness, execution of instructions by the bank, loss of invoice for payment;
  • the absence at the right time of a sufficient amount of money due to the inability to distribute income and expenses by time;
  • failure to fulfill obligations to counterparties of third parties;
  • deterioration of the financial condition of the counterparty (excess of expenses over income, decrease in income, loss of work);
  • another payment priority (for example, the period of tax payments);
  • "non-payment policy" (deliberate violation of obligations in order to use money in their own interests);
  • intentional reluctance to pay and readiness to defend this position in court;
  • economic situation in the country;
  • accident: death, disability;
  • fraud;
  • force majeure circumstances.

Knowing the reason for the delay largely determines the further measures for the debtor.

This entry was posted on Monday, July 1st, 2019 at 8:30