The rising cost of living, especially in these challenging economic times, makes one’s ability to honour their debts quite hard. People have to prioritise their spending, with debt payment trailing basic needs. This article looks at the impact of inflation on rising interest rates, how that affects a debtor’s ability to pay, and what options you have as you chase down such customers.
Interest rates and inflation
Interest rates and inflation tend to behave in the same manner. As inflation increases, so will the interest rates on money borrowed. Inflation is particularly bothersome in debt recovery, since those who owe find paying to be even harder than normal. If people’s income increased with the rise in inflation, they would manage their payments as usual, but such a romantic scenario isn’t possible. Normally, people’s income tends to stagnate and, in some cases, decrease as inflation rises.
What can you do?
As things get tougher for your customers, you’ll need to take specific steps to get your money back. An important one is keeping a closer eye on your customers. It’s vital to remain in close contact with your customers. For instance, a customer who owes you may decide to channel their dwindling funds to other projects more important to them than your instalments. However, with constant communication and timely reminders, it’ll be hard not to prioritise paying you. You’ll need an efficient debt monitoring system in place. Get commitments for pending payments, and ensure you check in a timely and decent manner to push for payments.
Remember, the longer it goes without payments, the more the debt loses its value. A rise in inflation means a drop in the value of the currency. The option to institute an interest rate as a form of fine on delayed payments is not effective either. There is the time lost before you affected that change, meaning you have already lost a certain amount. At the same time, it’s difficult to take such measures when your customers complain about how tough things have become.
Debt collection services
If all else fails, you may resort to using debt collection services. We understand that times are hard, so we work to ensure your business does not suffer unnecessarily. With over 75 years of combined experience, we know how to approach your customers in a professional yet uncompromising manner and collect your dues. Call us today, and let us help you handle your debt collection problem.