How Do Freelancers Handle Debt Collection? – What Startups Should Know

How do freelancers handle debt collection? Read on to find out how.

The process of collecting debts owed by individuals or businesses is known as debt collection. A collection agency or debt collector is a company that specializes in debt collecting.

Therefore, the top basic trust in debt collection is having a transparent pricing, invoicing, and collection timetable, and all of these make a huge difference. Others include:

• Learn from your mistakes and do your best to make good decisions right away. 
• To ensure your client’s commitment, request a 30% + prepayment. 
• Keep track of invoices and send out reminders using a good system. Many of the reasons for late payments aren’t malicious. 
• If an invoice goes bad, think about whether you want to do business with the client again (this can lead to tricky situations). 
• If you must hire a debt collector, make sure it is a reputable one. 

However, the quick question here would be, are there any startups in Nigeria that solve the problem of debt collections for those that work by themselves? Currently, there are none, but we hope to see such businesses spring up in the future.

This article will provide an outline of the Fintech Startups that are revolutionizing the debt-collecting industry and answer the question of “How do freelancers handle debt collection”.

How Do Freelancers Handle Debt Collection? 

Freelancers can handle debt collection by:

1. Make sure you set up proper reminders in whatever invoicing app you are using or set up a system of tracking invoices.
2. From the email reminders, you can send your clients’ messages for a gentle reminder or nudge.
3. If you work for yourself as a freelancer, it is pertinent to hire the expertise of a debt collection company operating in your country and discuss with them your current situation. A debt collection company can help you ‌draft the paperwork and do the actual work.
4. Use the debt collection company as a follow-up on your invoices because who enjoys making awkward calls to clients owing them?. You can also use companies that only collect on B2B debt vs. consumers.
5. Do your best to make good judgment calls up front and all the time to follow up on the client.
6. Request a 20% + payment weekly to ensure commitment from your client.
7. Come up with a transparent pricing, invoicing, and collection schedule. This will make a great difference in trust.

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5 Debt Collections Startups 

1. Captira

Captira is a Greek word that means “captira” 

With its automated technologies, this Fintech startup based in the United States hopes to transform debt collection. Carol Collect is a debt collection automation program developed by Captira. This system is a cloud-based overdue account management application that automates debt collection for enterprises. 

Carol Collect gets to work by sending out reminders, notifications, and rewards. The software can negotiate, provide discounts, manage disputes and counteroffers, and build up custom payment plans by escalating requests. 

Full automation players for first-party receivables, such as Captira, are positioning software to conduct the actual task in its whole rather than just as a tracking and reporting system for AR or collectors. Business-to-Business (B2B) in the United States is the focus.

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2. InDebted 

InDebted was formed in 2016 to revolutionize the debt collection industry. InDebt’s strategy is to replace calls with simple and appealing communications. The Fintech Startup adjusts client communication based on data and behavioural analysis. 

Every InDebted notification includes a one-click link to a self-service portal where consumers can resolve their accounts without having to speak with anyone. 

This automated approach is used by over 90% of clients to solve their problems. InDebted has over 250k consumers on its platform and has a Google satisfaction rating of 98 percent. 

Their business services are in Australia, the United States, Canada, and New Zealand. 

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3. Pair Finance 

PAIR Finance has its roots in the digital marketing business and aspires to be a debt collection technology leader. The toolbox of this debt collecting firm is based on Reinforcement Learning, a type of Machine Learning. 

The algorithm learns to repeat effective techniques and increase the intensity of actions that have a beneficial impact on the target outcome. The system works by picking the best contact method from a list of options. E-mail, text messages, and messenger services are all alternatives, as well as sending a letter or meeting in person. 

Aside from communication methods, the algorithm tailors payment alternatives to the customer’s financial status. 

It can, for example, create a fully automated installment payment plan for each customer and complete it on a legally binding basis.

PAIR Finance manages the client’s whole debt collection procedure. The technology is employed in the out-of-court collection process and at higher levels of escalation, such as the enforcement order and long-term monitoring. 

Business Focus areas: (B2B) in Germany and the European Union.

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4. CollectionHub 

Large enterprises with complicated AR processes that want to innovate and improve O2C across multiple functional areas can benefit from CollectionHub. SSOT (single source of truth) is provided by CollectionHub across departments, nations, and roles. 

This fintech firm can handle any issue, including late payments, factoring, or foreign litigation. They not only offer a full ARM solution but also own the world’s largest network of debt buyers, collectors, and law firms, which spans 134 nations. 

Their business area focuses on B2B, and their location is in North America, and European companies are the focus.

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5. Debtor Daddy 

DebtorDaddy’s revolutionary element is based on a blend of smart technology and the human factor. This Fintech Startup uses a fully automated method to deliver invoices and account information to collection partners, eliminating the need for phone calls or forms. 

A team of specialists from various backgrounds that provide human-centered support to clients and their businesses complements the technology infrastructure. 

Their focus is on small businesses, accountants, and bookkeepers in New Zealand and the Asia-Pacific region.

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Are there any startups in Nigeria that solve the Problem of debt collections for those that work by themselves?

There is none for now in Nigeria, but we hope to see such businesses in the future. Tech finance companies in Nigeria can try this niche out and develop it with time.

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Conclusion

Most freelancers prefer to use some specific ways that help people handle debt collection with great results, but they need to also try out other ways and methods. To get satisfactory help as a freelancer, you must get a detailed idea about how to handle debt collection ‌properly. 

These agencies that specialize in collecting debts for small businesses charge a fee. Depending on how much you need to collect, get multiple quotes from collection agencies so that you can find which of the company work best for your budget.