Know Your Debtor

When managing past-due consumer collection accounts, it is important to understand the reason for non-payment. Knowing why a customer cannot or will not pay can help you determine the next, most effective action and increase your odds of collecting the past due amount.
The first step is identifying what type of customer you are working with. There are four types:

Willing and Able – This person is your ideal customer. They have the resources to pay their outstanding invoices and are willing to pay. This person usually finds him or herself in debt because of some error. For instance, maybe the invoice was lost in the mail.

Unwilling but Able – This customer has the resources to pay, but refuses. Maybe he or she has some dispute regarding the balance owed or was unhappy with the product or service. In this case, finding a solution to the dispute is often possible and will lead to payment.

Willing but Unable – This person wants to pay, but cannot for financial reasons. They acknowledge the bill and may have even made some effort to pay, but cannot take care of the whole balance. Working out a payment plan is usually the most helpful option for this customer.

Unwilling and Unable – This customer is often the most difficult to work with. He or she refuses to pay and can’t afford to do so anyway. Diffusing the dispute and attempting to set up a payment plan are the best courses of action with this customer.

Identifying the type of customer you’re working with is a valuable first step in the collection process. Once you know your customer’s needs you can work with him or her towards a resolution.

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