In light of the economic impact of the COVID-19 pandemic, April has been declared Financial Capability Month “to highlight the value of high-quality financial education to improving Americans’ financial capability.”
But what does financial capability mean? And how does this apply to collections?
At Cedar Financial, we believe that financial responsibility starts with education.
Some debt collection agencies focus only on getting paid – they don’t take the time to listen and educate customers about their debts and why they owe them.
This business-only approach can be a bit like slapping a band-aid on a gaping wound.
If customers don’t understand why they owe what they owe, they aren’t likely to pay. Adding an aggressive collector into the mix can cause your customers to lose trust in your business, resulting in decreased customer satisfaction, revenue losses, and even negative press.
We think it’s only fair if we are asking someone to pay a debt that they fully understand the terms of that debt. That’s why we make educating consumers part of our daily practice.
Here are a few things we do to educate your customers (and help you get paid!).
Collect Debt the Right Way
1. Explain the Financial Jargon
Terms like deductible, arrears and chargeback aren’t words everyday people commonly use. Many don’t understand the terms and conditions of a loan. And when they don’t understand, they often aren’t comfortable paying.
Customers should understand the language, so the debt makes sense. Every word of it.
Our patient collections team provides documents and carefully reviews the terms of the debt with your debtor to make complicated billing processes a bit less complicated.
People more willing to listen – and pay – if they understand what they’ve agreed to.
“If I ever had any questions or concerns, I knew that you were immediately available with answers. You were also able to break down some credit jargon for me that I was unaware of prior to working with you in resolving this debt. Thank you so much for helping me through this process!” Testimonial by Emily V. on June 9, 2020
2. Discuss Payment Options
Customers often stress out when collectors call because they can’t pay the debt “right now.”
We make sure they understand that all the options available, such as income-based payment plans.
Our understanding collections team helps people review their income to see what they can afford to pay, when. We inform them about accruing interest, if any, and give them reasonable options to help them get out of debt in a timely manner – without hurting their budget.
The customer is educated about each option in detail so they can choose the option that is best suited – for both sides.
3. Provide Resources on Debt Management
Not everyone is a financial expert, which can make it difficult to build trust.
As a transparent, People-First agency, we offer your customers trusted third-party resources that help them manage their debt every step of the way.
We encourage them to learn about their rights, payment options, and the collection process, so they feel more confident resolving their debt.
We want them to have peace of mind knowing that we have their best interest at heart.
Keep customers informed about their debts
How Can You Better Educate Your Customers?
Helping customers understand their debt is essential for keeping accounts receivables in check. You can help reduce your Days Sales Outstanding by educating your customers from the start:
- Set clear expectations
Before people even sign up, make sure your process and terms are clear. How long will people have to pay? How do they pay? What happens if they don’t pay? Go through your process with a fine-tooth comb and make sure everything is covered so your customers aren’t surprised.
You might also consider additional resources, such as entrance counseling, an easy-to-find FAQ, or a support team to answer questions.
- Make it easy to understand
How many people actually read the fine print? And how often is this in easy-to-read language? If customers don’t understand something, they may have more problems down the line. Keep complicated jargon to a minimum, while focusing on using clear, easy-to-understand language.
- Provide more support, on multiple channels
If customers have an issue, how easy is it to reach you? Can they call, email, chat? Or is this information hard to find? And how are you contacting them, if they don’t pay? Are you contacting them at all?
Often disputes arise simply because customers had a question they couldn’t get answered. Being there for them at all stages of the debt can make all the difference to your AR.
These are all great tips for improving your AR processes – yet, not every creditor has the time or resources to implement them.
That’s where a quality accounts receivable management partner like Cedar Financial can help. We offer affordable solutions tailored to your needs to help you fill the education gap, including:
- Business Process Outsourcing & Contact Center Solutions
- Early-Out and Pre-Collection Services
- Amicable Debt Collection Services
Stop wasting time and money on financial band-aids. Get to the root of your customers’ problems with Cedar’s people-first, educational approach. Call 800-804-3353 for your Free AR Consultation.
Get Your Free AR Consultation
*The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
