If you offer financing options, such as business, auto or student loans, among others, to businesses or individuals, chances are you have dealt with different types of debtors. Some may be easy to work with, and others not.
Here are three common types of debtors you may have encountered:
1. Those who don’t want to pay
The first type of debtors are those not planning to pay their loans. They will do anything to avoid paying, including giving you endless excuses.
For example, an accounts receivable debtor may keep informing you they have not been paid by their customer yet. Some will even lie they already posted the check or send an unsigned check to buy time. And when you call to ask for the signed check, they may tell you their director is not in the office.
2. Those with many payments due at once
Debtors with many payments due at once may forget or delay paying you, especially if they don’t make such payments regularly. Reminding them can be beneficial.
3. Those who want to pay but can’t do so on time
A debtor may be willing to pay, but due to an unavoidable circumstance, such as financial trouble, they may not be able to do so on time. Unfortunately, you will hear the “excuses” of a debtor who doesn’t want to pay from this type of debtor as well. They may truly have not been paid yet by a customer, or a signatory of a check may not be in the office.
That’s why you should always ask a debtor follow-up questions. A debtor willing to answer your questions in-depth may be honestly in a situation that makes it impossible for them to pay you at the moment.
Dealing with the first type of debtor discussed above can be devastating. Consider seeking legal guidance sooner to keep the lights on in your business.
