The speed and effectiveness of a debt collection company can vary a great deal depending on a number of different variables. One of the best ways that you can help to improve the odds of a successful collection is by providing the collection agency with proper documentation of the debt.
Taking the time to document every interaction with a debtor from the initial sale to the point where you turn the collection over to a professional can be a daunting task. However, putting a system in place that allows you to have these documents on file if needed will go a long way towards assisting in your debt collection services.
Here are some of the most important documents that you will want to provide your collection agency with:
Credit Application
Before issuing credit to any customers, you should require them to fill out a credit application. This document will provide a starting point for a collection agency to reference information like personal and banking information, as well as terms and conditions of the credit being extended.
Purchase Order / Contract
After you review the credit application and determine that you are prepared to offer credit, the next step is to complete either a contract or purchase order depending on the goods or services you are providing. This document should be a detailed account of the product or service you are providing. It should also contain the payment terms that you and the consumer agree on and the date of the original sale.
Putting as much detail into this document as possible with respect to the terms could prove to be extremely valuable later in the collection process. Be sure to explicitly state conditions that will apply to situations like late payments or bad checks.
Account Statements
Providing your collection agency with an easy to read statement of the account will also be very helpful. This document should include the current outstanding balance, preferably broken into principle and interest amounts. It will also be helpful for this statement to include what the initial balance was and any payments that have already been made.
Returned Payments
If there have been any returned checks or other defaulted payments in your dealings with the debtor, you should be able to provide copies of those for your collection company.
Credit Report
Having a copy of the debtor’s credit report could provide specific information about other debts or liens that the debtor might be dealing with. This information could prove very helpful for your collection company.
Detailed Notes
One of the most important forms of documentation are notes that describe the details of any correspondence you have had with the debtor. Saving copies of emails and letters that you exchange is a great start. You should also keep notes on any phone conversations and attempted phone calls. Providing all of this information to your collection agency can help them better understand the situation.
This amount of information might seem a bit overwhelming. It can be difficult to keep all of these documents current when you are supposed to be focused on actually running your business. However, if you get a system in place to automate the filing of as much of this information as possible, you may find all of it to be incredibly useful when you decide to turn the collection attempt over to a professional debt collection agency.
