Tailored solutions for bad debt refer to customized strategies and approaches designed by debt collection agencies in UAE to address the issue of non-performing or delinquent debt. These solutions are typically developed to suit the specific circumstances and needs of SMEs, or organizations facing challenges related to bad debt.
This article explores the various benefits of customized approaches in debt collection and how they can contribute to improved recovery rates:
1- Customized Plans of Debt recovery for businesses:
When a company is experiencing financial hardship and is unable to make full debt repayments, a debt recovery agency can work with them to create a payment plan that aligns with their current financial situation. The debt collection agency will typically assess the debtor’s income, expenses, and overall financial capacity to determine an affordable payment amount. This may involve reviewing the debtor’s bank statements, pay stubs, or other financial documents to gain a clear understanding of their financial picture.
Based on this assessment, the debt management services can propose a modified repayment plan that reduces the monthly payment amount, extends the repayment period, or offers a combination of both. The agency will increase the likelihood of regular payments and eventual debt resolution by tailoring the payment plan to the debtor’s financial circumstances.
2- In-depth Financial Analysis and Debtor Segmentation
Normally, debt recovery firms achieve higher recovery rates by utilizing their experience in situation analysis and segmentation.
Debt collection companies employ advanced analytics to assess debtor profiles and payment patterns. Utilizing sophisticated data analysis techniques grants these agencies a comprehensive understanding of each debtor’s financial situation, including their income, expenses, and previous payment history.
Once debt collection services have analyzed debtor profiles, they can segment them into different groups based on their financial capabilities, willingness to pay, and other relevant factors. This segmentation enables agencies to tailor their approach to each debtor, ensuring that the strategies employed are most likely to resonate with them. For example, debtors who have a history of making partial payments may require a different strategy than those who have consistently missed payments altogether.
3- Debtor Lost and Found
When a debtor’s contact information is outdated or unavailable, debt recovery agencies may employ skip tracing techniques to locate the debtor and establish communication. Skip tracing involves using various methods and databases to track down the debtor’s current address, phone number, or other contact details. In the context of tailoring techniques to a debtor’s financial situation, skip tracing allows the agency to reach out to the debtor using the most appropriate communication channels.
For example, if the debtor has indicated a preference for email correspondence, the agency can use the obtained contact information to send communications via email.
Alternatively, if the debtor has a history of responding better to phone calls, the agency can use the obtained phone number to make contact. Employing skip tracing techniques, enables debt recovery agencies to ensure that they can reach the debtor effectively, taking into account the debtor’s preferred communication methods and maximizing the chances of successful engagement and debt resolution.
4- Financial Counseling Referrals
Debt collection firms may recognize that some debtors require more comprehensive assistance beyond debt repayment options. In such cases, they may refer debtors to financial counseling services. Financial counseling services provide personalized guidance and support to debtors, helping them develop effective budgeting strategies, debt management plans, and long-term financial plans.
The counselor will typically review the debtor’s financial situation, provide education on financial literacy, and work collaboratively with the debtor to develop a tailored plan for improving their financial health. Referring debtors to financial counseling services, professional debt recovery services empower debtors with the tools and knowledge needed to address the root causes of their financial challenges and establish a more stable financial future.
5- Evaluation for Debt Claim Case:
In some instances, debt management agencies may need to evaluate the viability of pursuing legal action against a debtor. This evaluation typically takes into consideration the debtor’s financial situation, including their assets, income, and liabilities. If the debtor has limited assets or income, pursuing legal action may not be cost-effective or yield significant results.
In such cases, the agency may recommend alternative approaches, such as negotiation or debt settlement discussions, rather than pursuing legal avenues. However, if the debtor has substantial assets or income that could potentially satisfy the debt, the agency may advise the creditor to proceed with legal action to recover the debt through legal means, such as obtaining a judgment or placing liens on assets. The evaluation of legal action ensures that the debt management agency and the creditor make informed decisions based on the debtor’s financial circumstances and the potential for successful debt recovery.
These tailored techniques aim to provide comprehensive support to debtors, taking into account their unique financial challenges and circumstances. Offering financial hardship assistance programs, referring debtors to financial counseling services, and evaluating the viability of legal action, allows debt recovery agencies to find the most appropriate and effective solutions for debtors while maximizing the chances of successful debt recovery for the creditor.