Purpose
Debt collection is the process of pursuing a debtor’s overdue payments (businesses or individuals). Collection companies or debt collectors are businesses that specialize in debt recovery. For a fee or commission, collectors operate on behalf of creditors to persuade debtors to make all outstanding payments.
Debt collection and recovery are crucial because poor cash flow can generate major organizational problems. Although debt collection and debt recovery are sometimes used interchangeably, there is a small difference between the two.
You will graduate from this course fully informed and equipped about managing credit control and recovering unpaid debt.
Course Objectives
This course on Debt Collection, Recovery, Negotiation, and Credit Control Management’s main goal is to equip professionals with the skills to—
- define and establish strong credit control systems and processes to reduce the risks of defaulters having an adverse financial impact on the organization; • draft simple, clear credit policies and other guidelines to ensure that the precaution required is understood and followed by all employees organization-wide
- train other professionals in best practices and concepts of debt collection, recovery, negotiation, and credit control management • negotiate on behalf of one’s organization with debtors to recover the maximum amount possible, thereby supporting organizational stability and growth and establishing a strong foundation for future success.
Utilizing cutting-edge tools and technology, one can: • improve screening, monitoring, tracking, and follow-up procedures; • audit current documentation and active loan agreements to spot risks early and respond appropriately; • have exceptional experience and multitasking skills to handle more responsibility both inside and outside the organization, advancing one’s career;
Target Audience
- Strategic leadership of an organisation responsible for establishing and implementing high-level decisions
- Finance and loan managers carrying out their responsibilities involving financial transactions and issuance of loans
- Accountants and other executives who need to understand credit control management thoroughly
- Collection agency members who wish to enhance their knowledge of related aspects
- Legal andfinancial advisors of organisations playing an important role when a legal or finance leakage issue occurs
- Any other professional interested in knowing more about debt collection and recovery
Course Outline
The Debt Collection, Recovery, Negotiation and Credit Control Management course covers the following topics regarding debt collection, recovery, negotiation and credit control management:
Topic 1 – Types of Debt Collectors
- First-party agencies
- Third-party agencies
- Sale of debts
Topic 2 – Debt Recovery Process
- Initial consultation
- Due diligence
- Issue of letter of demand
- Awaiting response and negotiate
- Filing of court papers
- Enforcement of court decision
Topic 3 – Measures Reducing Bad Debt Recovery
- Thorough customer background check
- Safe customer credit limits
- Release of goods after payment clearance
- Shipping of goods after direct deposit payment
- Regular invoicing
- Clear payment instructions and terms on invoices
- Regular contact with customers
Topic 4 – Effective Debt Collection Strategies
- Alternate but flexible payment terms
- Customer-oriented operations
- Up-to-date communications
- Applied analytics
- Centralised debt collection systems
Topic 5 – Challenges Impacting Debt Collection Operations
- Increased focus of regulators
- Ineffective debt collection systems
- Inefficient customer segmentation
- Lack of proper tools
- Lack of a consolidated borrower-centric approach
- Multi-product, multi-channel, multi-debt obligations
Topic 6 – Debt Collection Agency Functions
- Tracing creditor
- Negotiating
- Systematic follow-up
- Maintaining records
Topic 7 – Methods of Debt Collection Agencies to Recover Debt
- Freezing accounts
- Property as security
- Wage garnishment
Topic 8 – Effective Credit Policy Components
- Term of sale
- Credit extension
- Collection policy
Topic 9 – Effective Debt Settlement Negotiations
- Start with reminders
- Have accurate information
- Do your research
- Stay professional
- Approach negotiations as equals
- Have a concrete minimum
- Require a counter-offer
- Confirm deal in writing
- Clearly explain ramifications
- Remember follow-up letters
Topic 10 – Cash Flow Management
- Cash flow cycle
- Accelerating cash inflows
- Cash flow forecast
- Cash flow surpluses and shortages
Topic 11 – Credit Control System Set-Up
- Clear credit terms and limit
- Check new customer credit scores
- Terms and conditions in writing
- Offer different payment options
- Consider discounts for early payments
- Send regular reminders
- Employ debt collection agencies
- Commence legal proceedings in time
- Buy trade credit insurance
Topic 12 – Credit Risk Modelling Examples
- Financial statement analysis models
- Default probability models
- Machine learning models
Topic 13 – Factors Affecting Borrowers’ Credit Risk
- The probability of default
- Loss given default
- Exposure at default