The Bank of Mom and Dad
By Phillip W. Duff
The failure of the banks and the declining economy along with rising unemployment has left us using old school techniques to get cash. People are holding on to cash much tighter than in past years in fact the ACA stated that 50% of all debtors have the money but are not willing to let go of the cash and that debtors are using prioritiziation to determine who gets paid and who does not leaving the debt collector in the cold.
So the Bank of mom and dad has returned as a primary way to liquidate bad debts for the debtors below 30 years of age, yes 30. The numbers how that more and more families are living together with multiple generations in one household, this is expected to be further explored in the 2010 census.
Debtors are more likely to need and expect a payment plan to reduce their debt and will pay the collector who is more customer friendly first. So empowered with this knowledge how do we use this to increase collections.
First you must segment the business that is most likely to be interested in paying and can be reached via phone or letter. Then by using some old school techniques of getting the debtor to divulge their complete financial status and then following that with some sound financial advice a experienced low key collector can get the bill paid. If this is not effective the legal process is showing some movement towards liquidity as consumer confidence increase the purse strings loosen also.
It takes a highly trained collector to be able to get the full financial data from a debtor but with training it is very easy to obtain this debt changing data.
Lighthouse Consulting has developed many programs that can teach your staff to be the cash super sleuths’ needed in this economic climate. Contact us for more info.