According to the American Collectors Association, which has conducted a number of studies in banking, write-offs, and human behavioral aspects, bank debt collection should be viewed as a science. Reviewing the statistical results can aid in determining the best means of recovery of debt.
Half of customers facing bank debt collection procedures choose not to pay their delinquent debt, despite having the ability to do so. What this means is that persistence is vital, since many customers who can pay eventually will.
Of course, starting your bank debt collection efforts sooner is always better, for several reasons. First, know that most debtors delinquent on one account have multiple accounts in collections. Starting early helps put your account ahead of others pursuing the debtor to recover funds. Also, for debt collection firms, waiting until the account is more than 60 days old to pursue it decreases collection success rates by 49%.
Finding alternative methods of bank debt collection pursuit is an ideal strategy. Calls are often ignored and, according to studies, 80% of all successfully collected accounts by debt collection firms are recovered through letters mailed.
If you look at human behavior in general, it’s no wonder. After all, while collection calls for delinquent payments are ignored, bills received in the mail for current accounts - phone, electric, etc - are paid. In behavioral science, this is labeled as perceived consequences for nonpayment, which are absent in the phone call but obvious in the letter or bill received.
Often, letters also avoid being too aggressive. According to bank debt collection processes where demands are high and there is a lack of willingness on the part of the collector to negotiate manageable payments, collection efforts are 15-30% less successful.
At the same time, consequences for failure to remit payment must be evident. Debt collection firms achieve greater success because they report default accounts to the credit bureau. If bank debt collection followed the same procedure, there would be a greater return on investment.
Because bank debt collection is a science, formulating a plan of action can aid in building success. Recovering delinquent accounts is easier when a process is put in place based on an understanding of the debtor.