Good communication is key to success in debt recovery

Success in modern debt collection is not just about processes, numbers and technologies - it's just as much about good communication between debtor and creditor. It's far from a new perspective, but few debtors and creditors have mastered the discipline.

Good communication goes a long way towards creating a constructive solution to a financial dispute that both parties are often tired of.

In this article, we focus on good communication in debt collection - whether it's in the reminder process or the debt collection process.

We also give you good advice on how you as a creditor can create a good dialog with your debtors - and what you should do if the dialog cannot be established, is broken or ends.

Why is good communication important?

Good communication in debt collection cases is important for both debtor and creditor as it can in many respects solve the challenges that inevitably arise when a debtor owes money.

Debtors can benefit greatly from being honest about their financial situation. If the debtor is unable to pay all or part of their outstanding debt, many creditors (and debt collection agencies/lawyers) are often extremely responsive and willing to find a solution.

If you are honest with the creditor about your financial situation, the creditor has the opportunity to act on this - and, for example, offer a repayment plan, deferment or something completely different. Most debtors are often ashamed of not being able to meet their financial obligations and therefore find it difficult to establish a dialog with the creditor. This often results in no dialog - and increased frustration.

But it's not only the debtor who should reach out to the creditor. The creditor should also try to establish and maintain a good tone and a good dialog. This often helps to create a better solution and provides clarity for the debtor.

Good communication goes both ways

As in so many other relationships, it's important to remember that good communication should go both ways. The debtor should respect the creditor - and the creditor should respect the debtor.

If this doesn't happen, the dialogs are rarely very constructive - and thus it is rarely possible to establish sustainable solutions, such as a repayment plan.

If there is no mutual dialog and the debtor does not want to enter into a conversation, you as a creditor can consider your next steps - for example, sending the case from a reminder process to a debt collection process.

How do you create a good dialog?

Creating a good dialog can be demanding work - both from the debtor's side, but also from the creditor's side.

Often the creditor doesn't have the time to build a dialog and opportunities are limited in a busy workday. But one of the best ways for a creditor to create a good dialog is to call the debtor. This quickly establishes contact and clarifies whether the debtor wants a dialog at all.

In practice, it's often much easier to send reminders or debt collection notices by email or letter - but these rarely invite dialog and communication.

In practice, creating a dialog is also difficult for debtors - not because of a lack of opportunities to reach out to the creditor, but often because of a lack of energy and courage to make contact. Because if you're a debtor in a financially strained situation, it can be difficult to talk about it - and therefore also difficult to do something about it.

But the clear recommendation from here to the debtor is: get in touch! Many debt collection companies, lawyers and creditors are easy to talk to - and they want to get the matter resolved as much as you do. This also means that many are willing to make everything from installment agreements to forbearance - as long as the debtor reaches out, creates a dialogue and complies with the agreements.