Few tasks are more challenging for a company than collecting from debtors. Visits, letters and calls are the traditional ways to try to collect the outstanding balance, but today we know that these methods are very ineffective.
In this sense, SMS collection is a new option worth exploring to collect an outstanding debt. In this article we explain everything about SMS collection, its advantages and features.
Why are traditional methods ineffective for debt collection?
Traditional means such as phone calls and letters may not be advisable to get a debtor to pay his outstanding balance for several reasons, backed by statistics and common practices in debt management. Let's look at some of them:
- Low response rate: According to data compiled by the American Debt Collectors Association (ACA International), the average response rate to debt collection phone calls is just 23%. This means that most of the time, the calls do not result in any positive action from the debtor.
- Limited effectiveness of cards: While letters may be a less intrusive way to communicate with debtors, their effectiveness is equally limited. According to a survey by ACA International, the response rate to collection letters is only 22%.
- Change in communication preferences: With the advancement of technology, consumers are increasingly opting for digital forms of communication such as email or text messaging. According to a Deloitte study, 73% of adults aged 18-75 prefer text communications over voice calls.
- Higher cost and time: Traditional methods can be costly and time-consuming in terms of human and material resources. Telephone calls made by collection agents and the sending of letters can generate significant expenses for companies.
Most common uses of SMS in debt collection
The most common uses of SMS in debt collection include:
- Payment reminderThese are messages that are sent to all customers as a service to avoid late payments. Customers appreciate this, as it avoids the collection of interest or the inconvenience of service interruptions.
- Notice of past due balance. For example, when a cell phone company informs the customer that he or she no longer has credit on his or her line, in cases where a customer is in debt because the due date has arrived, the most practical way to let him or her know is to send him or her an SMS detailing his or her overdue balance and the date on which it is owed.
- Sending promotions for payment. It is used in cases where benefits are granted by paying in a certain way.
- Notice of payment alternatives such as rebates or discounts.
- Notification of electronic payment not made. If the customer's payment has not been made, either due to insufficient balance on the card or technical problems, they receive an SMS message to notify them that the payment is still pending.
- Payment Agreements: SMS offers the possibility of sending links with the payment agreement, or linking to Witty Send to send the payment agreement via this means.
- Thank you for receiving payment.
Shipping can be done via:
- Long sender (many senders, so the debtor client cannot block them),
- Short sender (single sender) or
- Masked sender (mark present, cannot be blocked, nor can it be answered).
What are the advantages of charging by SMS?
Carrying out collections via text messages (SMS) offers a series of advantages for both companies and debtor clients. Firstly, SMS is a direct and fast form of communication which allows companies to reach out to debtors effectively without being intrusive. Text messages have a high open and read rate, which means that debtors are more likely to see and respond to payment reminders sent this way.
Furthermore, SMS is highly accessible, as most people carry their cell phones with them at all times and tend to check their text messages regularly. This makes it debtors are more likely to see and respond to payment reminders compared to other less immediate means of communication.
Another major advantage of using SMS for collections is the ability to personalize. Businesses can send text messages tailored specifically to each debtor's situation, which can increase the effectiveness of payment reminders and improve the customer experience. Additionally, SMS can also include direct links to make online payments, making it easier for debtors to complete their payments quickly and conveniently, a benefit that other means such as telephone calls do not have.
Text messaging is also a cost-effective option for businesses, as it They are much cheaper than making phone calls or sending physical letters, and have higher opening rates than emails.This can help reduce costs associated with collection efforts and improve the company's overall profitability.
Besides:
- SMS does not depend on internet connection
- They are a little saturated channel
- They have a very high open rate.
If you are interested in collecting payments via SMS or making any other communication with your clients via SMS, find out more. Witty Send, the platform that allows you to send SMS messages connected to our API, receive the SMS sending request from another system and send the responses sent by users to another system. In addition, you can use SMS packages to avoid depending on a third party that charges a commission for each sending. Get to know it!
