REYKJAVIK, Iceland (TCM Newsroom) — TCM Belgium has implemented a new and highly effective way to collect debts: armed with the latest technology, mediators visit defaulting debtors to offer them an amicable solution to their situation.
Why visit the debtor?
When remote contact with a debtor (via letters, phone calls, emails, short messages, and fax) has failed, TCM Belgium sends a mediator to visit the debtor at his place of business or residence. This face-to-face meeting offers the debtor yet another opportunity to solve the problem.
In 2006, 21 percent of TCM Belgium’s claims were paid within 15 days of the debtor’s receiving the first demand letter. By contrast, in the first three quarters of 2013, we booked only 11 to 13 percent of payments within 15 days of the debtor’s receiving the first letter.
So the debtor’s behaviour has changed over the past eight years, especially since the global economic crises in 2008. The same evolution in the debtor’s conduct means that we are now forced to send an on-site mediator in 1 out of 10 claims (instead of the previous 1 out of 20).
TCM BE has been offering this ‘debtor visit’ service for over 10 years. In the past when debt collection was still quite old-fashioned (paper file based, cash brought to the bank) and very slow (several months before feedback was received), we used to subcontract the service. But we soon had to acknowledge the growing importance of this aspect of our trade, and so began inviting our staff to participate in the task. Some accepted, and we hired new people as well. We trained them and equipped them with an iPad and a payment terminal to allow them to perform their work in real time.
Currently, each staff member collects twice as much as former, subcontracted partners.
How do on-site visits work?
At the start of the day, the mediator can select the claims that involve on-site visits in a variety of ways—for example, by displaying the relevant debtor sites in Google Maps on the iPad. Naturally, each claim that a mediator downloads is comprehensive and up to date: it includes all base documents (e.g., copies of the invoices to be collected) and contains the latest known information on the case.
During a visit, the mediator has the option of taking pictures of proof of a former payment or of whatever other documents he deems useful to the case. Among other things, the mediator can update information on the debtor, make notes, and evaluate the meeting. While negotiating with the debtor, the mediator is guided by the iPad application for immediate payments and payment plans.
Immediate payments can be processed on the spot by having the debtor make a payment with a credit or debit card at the payment terminal. At the end of the meeting, the debtor signs a contract outlining his commitments (on the iPad screen) and receives a confirmation email immediately thereafter.
The system also sends a full report, in real time, to TCM BE.
What are the essential principles?
The purpose of the visit is to give the debtor an additional opportunity to resolve his debt dilemma amicably. If the first visit does not yield the expected results, the mediator goes back a second time.
In the first three quarters of 2013, TCM BE booked payments in 52 percent of visits performed, either by payment during the visit or at a later date. In the same period, each mediator made an average of 360 visits per month and generated an average of 33,000 euro per month in payments.
Our mediators receive on-going training on negotiation tactics as well as on the various social and economic dimensions of their work. The most important quality a mediator needs to possess is a positive attitude at all times. More often than not, debtors are quite sceptical at the beginning of a visit but soon recognize the wisdom of committing to repayment plan.
And even if they cannot pay, at least we have updated information on the case.
Mr. van der Vaeren is CEO of TCM Belgium and TCM Group.
