How to reduce default in times of crisis

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Every economic crisis causes a significant increase in the number of customers in debt. Reducing defaults becomes a challenge for many companies, which need to adopt new collection strategies, accompanied by a more humane approach.

In this context, empathy is what enables a balance between finances and consumer relations. Even more so now. The pandemic has left us all with a lot of uncertainty about the future. Therefore, an empathetic approach, combined with transparency and pragmatism, will certainly yield good results.

Another critical factor is the lack of knowledge 99 acres database collection tools. Accustomed to always using the same techniques, the entrepreneur finds himself in a state of uncertainty. He realizes that he needs to innovate and adopt new actions, but he doesn't know where to start.

So, if you want to know how to reduce defaulting on payments, you're in the right place. In this post, we present collection strategies combined with empathy, which bring good results and preserve the relationship with the customer.



What is default?


When a consumer fails to pay their financial obligations, they become in default. These obligations include:

Fixed bills such as rent, water, electricity, internet and telephone;
Credit card bills;
School fees;
Installment purchases;
Loans;
Financing;
Among others.


But what makes a customer stop paying a bill?

Sometimes it can be a simple oversight. Or it can be a choice. However, in times of crisis, even good payers can become delinquent. Right now, we are all going through financial difficulties and, unfortunately, many people will accumulate debts.



What problems does default cause for companies?


This situation is harmful for both consumers and companies.

If the buyer has a negative credit rating, he or she will not be able to acquire new credit without first paying off the amount owed. This means that the dream of owning a home or financing a car, for example, is gone.

For companies, defaulting on payments also has negative consequences. After all, they need financial resources to maintain their operations.

When an institution has many defaulting customers, cash flow is impacted, making financial management difficult . Payments to employees, suppliers and partners themselves will be affected. Even the funds allocated to marketing and sales actions will be affected. Not surprisingly, competitive advantage is reduced.

So, see how important it is to control default. Ideally, this rate should not be higher than 3%.