Hi, any businessman here got any idea on how to collect back bad debt ? In the real world, we might face some unreasonable customers that refuse to pay their obligations/debt, what should we do in this case ?

Small Business Owners Can Improve Their Chances of Collecting on Invoices
By Suzanne Kearns

Business owners are struggling enough in this weak economy, but when you add stagnant accounts receivables to the mix, it can make for some pretty tough financial times. According to a recent Dunn & Bradstreet report, small business owners are having to wait longer to get paid 20 percent more of the time than they were last year. In addition, there have many more business failures, and experts chalk that up to the difficulty that small businesses are having collecting on their past due accounts. Luckily, there are ways that small business owners can improve their chances of collecting on those invoices.

Let’s take a look at nine of them.

Understand the Timing

There have been many studies conducted on the art of collecting overdue accounts, and professional debt collectors put a lot of stock in the results of those studies. For instance, it’s widely understood that once an account goes past 30 days late, it suddenly becomes slightly less likely that the monies will be recovered. If it goes past 60 days, you’ll have about an 85 percent chance of collections, but let it go 90 days, and the recovery rate drops to a little better than 70 percent. Accounts that are 6 months late have about a 57 percent chance of getting paid, and those that go a year or longer are not likely to be paid at all.

Work With the Customer

There comes a time in many businesses when cash flow just isn’t what it should be, and when that happens, some invoices are set aside to be paid later. Sometimes this problem can be solved by simply calling and talking to the customer. If the customer admits to you that he or she is having cash flow problems, offer to set up a payment plan on the invoice. Sometimes this will push your invoice to the top of the list of those to be paid, and other times, the customer will just appreciate your willingness to work with him or her, and make more of an effort to get you paid.

Get Personal

It used to be that sending a letter asking for payment would many times prompt a response, but nowadays, it takes a lot more to get a delinquent customer’s attention. Some experts suggest that meeting a customer in person might do the trick. Showing up unannounced at the office, and then offering to wait until the accounts payable manager is free will definitely get some attention — as will showing up at the same place the customer frequents for lunch or coffee, and making a point to stop by and discuss the overdue account.

Offer a Settlement


If the customer won’t work with you and make payments on the past due amount, think about offering him or her a settlement. In this scenario the customer would agree to pay you a portion of the overall bill in return for you forgiving the remainder of the debt. For instance, if the customer owed you $10,000, and you agreed to 70 cents on the dollar, he or she would pay you $7,000, and you would call it even. When doing this, you should always attempt to collect enough to ensure that your costs are covered, but if the debtor’s situation is dire enough, it may be smart to agree to anything just to recover some of the monies owed.

Hire a Mediator

If you’ve tried to work it out on your own with the debtor, but can’t seem to agree on the terms, you might consider hiring a professional mediator. These professionals work together with creditors and debtors to help them reach solutions that benefit them both. If this is the route you choose, be sure to hire a professional who has been trained in the art. You can find a listing of professional mediators at the Association for Conflict Resolution at www.acrnet.org or (703) 234-4141.

Send a Final Letter

If you’ve tried collecting the debt yourself, but haven’t had any luck, there’s one more thing you can try before handing the account over to a professional collector. Sending out a demand letter, which informs the customer of your intent to refer his or her account to a lawyer or collection agency, will sometimes spur the customer on to action in order to avoid the related consequences. If you do send out such a letter, be sure to give the customer the date that the payment must be received by in order to avoid having his or her account turned over.


Get Professional Help

If you’ve exhausted all avenues of trying to collect the debt yourself, you might need to call in the experts. Professional debt collectors can generally collect overdue accounts when business owners can’t. That’s because they dedicate themselves full-time to collecting debt, and have all of the tools at their disposal, while small business owners typically wear many hats and don’t specialize in the area. But it’s critical that you do your homework before hiring one. Make sure to check out their reputations online and with the Better Business Bureau to ensure that they don’t have reputations for mistreating debtors, because your company’s name will be associated with their actions. Also, debt collectors must follow the rules of the Fair Debt Collection Practices Act, which outlines the way a collections agent can interact with a debtor. Violations of the act could land them in court, and once that happens, you may never be able to collect the debt.
You should only hire a collection agency that works on a contingency basis, which means that they only get paid if they actually collect the debt. Never agree to pay a flat fee for the service — they simply won’t be as motivated to collect the monies. Debt collection agencies charge a percentage of the debt as their fee, and you should plan on paying them about 50 percent of the amount owed.

Go to Court

If all else fails, you can take the debtor to court and sue for the amounts that the debtor owes you. If you win, there will be a judgment issued against the debtor stating that he or she owes you the money. Until the debtor pays it off, it will affect his or her credit report and likely prevent him or her from getting credit with anyone else. Also, a judgment accumulates 9 percent interest a year until it’s paid off, so if it takes a while for you to collect, you’ll at least earn interest. If the amount is under a certain limit, you’ll be able to file suit in small claims court — an uncomplicated and quick process. The limits vary in every state, but some will allow creditors to file a small claim’s suit for as little as $1,500.

File a Lien

If you have taken a debtor to court and won a judgment against him or her, but the debtor still refuses to pay, you can take the process one step further. In most cases, you will be able to place a lien on the debtor’s property. That way, you’ll collect on the debt if the debtor ever decides to sell it. For instance, if you have a lien on the debtor’s home, your judgment will be paid out of the proceeds before it’s ever given to the seller.

As you can see, if someone owes your business money and refuses to pay, you have plenty of options at your disposal. Yes, it will take a lot of time and work to make the debtor pay, but in the end, you’ll gain that much needed cash flow. After all, no matter how much you love what you do, you should be able to expect payment for your services. HBM

Suzanne Kearns has been a full-time writer for 20 years. She specializes in writing about small and home-based business issues and writes website copy, articles of all types, and books — both under her name and as a ghostwriter. In addition, she blogs and ghostblogs for numerous sites. She can be reached at mypersonalwriter@gmail.com.

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Do we need to pay any to hire a mediator ? If yes, how much ?

You can refer to the below thread:
https://forum.lowyat.net/topic/2887020/all

Example: http://www.debtcollectionmalaysia.com/

Collect Bad Debt T&C

Every day thousands of people are harassed by debt collection agencies. At best this harassment is annoying but in many cases it may even be illegal. You must be aware of the distinction between a creditor and a collection agency. A creditor is the company to which you owe the money. A debt collection agency is a third party (sometimes a law firm) that is charged with the task of collecting what you owe.

NEVER give a collection agency your cell phone number.

NEVER give the collection agency your family or friend's phone numbers to call you at their home. They'll harass your family until you pay your bills.

NEVER offer to pay anything unless the debt collector claims it writing first. If they call you on the phone, tell them they'll just have to wait.

YOUR RIGHTS WITH COLLECTION AGENCIES
A federal law called the Fair Debt Collection Practices Act was created by the FTC to protect us. Most people are unaware that this law even exists. Unfortunately this law applies only to third party collection agencies and not to the creditor to which you owe the money, as they are usually banks, and assumed to be decent people. Here's a brief summary of the FTC law:

1) You may stop a collector from contacting you by writing them return receipt mail, and telling them to stop. Once the agency receives your letter, they may not contact you again except to say there will be no further contact. The debt collection agency may also notify you if the debt collector or the creditor intends to take some specific action.

2) Debt collection agencies may NOT contact you outside the hours of 8:00 AM and 9:00 PM.

3) Debt collection agencies may NOT contact you at unreasonable places.

4) Debt collection agencies may NOT contact you at work if you have told them that your employer does not approve of the contact.

5) Debt collection agencies may NOT misrepresent themselves as agents of the government, attorneys, or as employees of credit bureaus. They can't use false names either, although many do.

6) Debt collection agencies may NOT make false statements. For example they may not imply that you have committed a crime (since you have not done so). They can't say that you'll go to jail, they can't lie about the status of legal documents they are sending you, and they can't say they'll garnish your wages.

7) Debt collection agencies may NOT contact other people about you except to find out where you live or work. They cannot reveal how much debt you owe to other people or publish a list of people who have bad debt. They cannot slander your reputation.

8) Debt collection agencies may NOT verbally abuse you, threaten your life, or use profanity.

9) Debt collection agencies may NOT cause your telephone to ring and ring, or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.


Report violations from a debt collector to your state Attorney General's office to determine your rights.

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Basically we went to their office and ask for the money. They intent to use RM800 to pay out RM3000 that they owe me. There is no such thing in this world lar....sumore the boss attitude is bad...what is the cheapest & faster way to get back the payment ? This amount have been overdue for 6 months...

Most of the company will waive the debt, if the debt is just only RM3000, and blacklist their Company & forbidden any business with them in future.

If you hire debt collector & Court will be more costly, unless the amount are big & you willing sue the his company.

Just called to the website that you recommend just now http://www.debtcollectionmalaysia.com/ , their charges not that expansive. Considering to use their service ...what do you think ?

Owh , i face that all the time . So usually get the clients to sign pg , prepare downpayment etc . after that law suit ... but this process applicable if u have money to sustain .

Alternatively , u need to get ur hands dirty ..

You can try to talk & nego with that www.debtcollectionmalaysia.com , and see how can they help you.
If you agree, then you may proceed with www.debtcollectionmalaysia.com

Good thread. Just to add some personal experience with debt collector in Malaysia since my co. has experience with a couple of them.

without naming them, i must say they are super effective for personal debt (working for banks, membership fee chasing) but not good for collecting biz debt.

Now new tactic that i hear from people, those along hired bangala to do the dirty thing.

one effective way i have learnt from them iis first do a company check (it is very cheap to do using this link
https://www.ssm-einfo.my/index.php?id=login

registered yourself, pay by Maybank of credit car, something like RM15, get the directors' home addresses and GET SOMEONE to pay them a visit.

Hi, did you successfully collect your debts through debtcollectionmalaysia?

rule no. 1 is don't be too aggresive and too pushy.

so they are having a bad time now to repay you. Keep them in a professional relationship and ask nicely when they can settle the rest.

6 months isn't much if they are regular client.

if they are your regular customers, you should give them some leeway just from the fact they get goods from you.
If not, issue a lawyer letter and wait & see what their response will be ... worse case is to ask those money debt collector to do the job for u.

what if bad debt from friends????

i have their bank account, who can help???

One of the way is to list the bad debt in CTOS , my company is doing this, is quite effective.

Bad list in ctos
Then u goto kacau him during lunch,
Ask everyone same table with him,

U come to collect money ? Please , I come first. Thank you.

And repeat whether in his office or outside or family member

Issue letter of demand... but the company is not active anymore, still can get back the bad debt?

my company always use this debt recovery company, 90% recovery success rate

Petra&Partners
Contact: Sham - 012.2796220

Hate to break it to you but most likely wont be able to collect back most of them...
If they refused to pay, they wont pay

My father has some peoples owe him quite alot of money... some of them died already
Shitty people everywhere