Debt collection is complex. There are a lot of local regulations to adhere to, and debt collection processes can take a lot of time since records need to be kept of all correspondence between debtor and collector. 

While you are trying to recover funds from debtors, there are also a number of different strategies that can be tried. Two of the most common strategies are soft collection and hard collection strategies. It is important to understand the difference between these two strategies and when to use them. Using the wrong strategy at the wrong time can be terribly unfair to debtors and is very likely to tarnish the relationship.

So, when do you use soft and hard collection strategies and what are the differences between these methods? Let’s find out.

Soft Collections

The soft collection method is a gentle approach that businesses or debt collectors use to recover payments that are overdue. With this collection method, a professional yet friendly tone is used, and the main focus is to recover debt while maintaining a positive relationship with the debtor.

Methods Used for Soft Collection

During the soft-collection method, debt collectors might send friendly reminder emails, texts, or letters. Debtors will also receive courteous phone calls during which they might be offered payment plans, extensions, or more flexible payment arrangements.

When to Use Soft Collection

Soft collection is mostly used for clients who are overdue by about 1 to 90 days. This method can be extended for longer if customers have a longstanding history of making regular payments, yet seem to be struggling temporarily. It is also the preferred method for larger customers whom creditors want to retain for long-term business purposes.

Hard Collections

Hard collections are a firmer and more aggressive approach. This tactic is used when soft collection methods fail. With hard collections, collecting debt takes priority over maintaining customer relationships. The tone for hard collection tends to be more formal, authoritative, and strict. 

Methods Used for Hard Collection

Hard collections involve sending letters of demand and making multiple, escalated phone calls. Third-party collection regions are always used because staying compliant with local debt recovery regulations during this phase can be challenging. When hard collection strategies are not immediately successful, legal action can be taken, and debtors can be reported to credit bureaus. 

When to Use Hard Collection Methods

These excessive methods are used when accounts have been overdue for over 90 days. The method can also be used for customers who are unresponsive during soft collection efforts and for debtors who have a high risk of not paying up.

Use the Right Strategy With Help From Debt Collectors

Soft and hard debt collection are just two of many different strategies that can be used to recover funds. Using the right strategy at the right time can greatly improve your chances of recovering funds and will also help maintain a positive relationship with clients while maintaining a professional appearance.

If you have debtors overdue on their accounts, then it is best to get help from an experienced debt recovery team. At Vic Collect, we specialise in debt collection. We can easily determine what recovery strategy to use for every client and will take full charge of all of the tedious recovery processes.

Contact Vic Collect and start outsourcing your debt collection. Our company increases the chance of recovering funds, buys you plenty of time, and will help you remain compliant with local regulations throughout the recovery process.