If you’re in a product or service industry, you’ve likely faced a time when you realized your bad debt was catching up with you. At this point, you may have considered the use of a collection's agency. Maybe you were even scared to take the leap of faith? These fears may be the reason you’re missing out on the revenue that your business needs, negatively impacting your day-to-day business. In fact, a lack of funds can affect employee retention, lead to freezing critical marketing activities, and in extreme cases, can ultimately result in closing your doors permanently.
According to Investopedia.com, recovery rate is defined as the extent to which principal and accrued interest on defaulted debt can be recovered, expressed as a percentage of face value.
Did you know that 61% of consumers have been negatively impacted by COVID-19? The greatest increase in bad debt began in March 2020, and as a result, the largest phase of third-party collections is estimated to begin in October of 2020, extending well into 2021.
From self-isolation to job loss, and most importantly, the tragic loss of family members and friends, COVID-19 has affected every individual in some way; not one person is exempt from the perils of this economic and physical state of emergency. With new restrictions hitting the headlines daily regarding debt collection, and the historical negative perception of debt collectors, many regulators called for a stop in collections activity. However, this may actually cause more stress for people impacted by financial difficulties caused by COVID-19.
Though we may not like it, debt is often a necessary part of life, meaning there's absolutely no shame in borrowing from time-to-time. Unfortunately, many people find themselves in these financial situations simply because they do not know how to handle the collection process. When this happens, debt just continues to pile up, leading to negative outcomes.
When it comes to debt collecting, it’s incredibly important to have a clear understanding of the people from whom you are attempting to collect. Everyone has a unique set of personal values and experiences which makes it important for agencies to locate methods that works for everyone. While this can be one of the most difficult tasks of collecting, it can be made easier by examining the differences between generations: Baby Boomers, Generation X, Millennials and Generation Z.