Every day we’re faced with urban myths about politics and celebrities, and on a less scandalous scale, myths around managing our finances. While the world of celebrities doesn’t have much impact on our daily lives, nothing is more personal to us than business cash flow. It’s therefore essential to weed out the myths from the truth to ensure you’re ahead of the debt game. Here are 5 examples of fiction that are often mistaken for fact around debt collection.
1. A little knowledge gives you an advantage
When it comes to any advantages around late payment of invoices or outstanding debts, the only benefit you have on your side is to pay your debts on time. No matter what you think you know about the legalese around debts, you can be sure that records and digital collection are two steps in front of you. So in this arena, complacency won’t help your financial situation.
2. Ignore debt and it will cease to exist
Just as we try and ignore our Christmas weight gain, debt is just as obvious and won’t go down without a fight. While emails, letters, texts and phone calls from creditors may cease after a while, silence isn’t golden. In fact if these cease, it may mean that your debt has been escalated to the next level, which isn’t good news for you. It may have been referred to a debt collector and will certainly be recorded on your credit record. Out of sight is definitely not out of mind – or out of record.
3. Debt collectors aren’t flexible, so there’s no point in me paying
Businesses collecting debt, especially Kiwi SMEs, know the challenges involved in cash flow and believe it or not, they are sensitive and sympathetic to your needs. They would much rather that you contact them and explain what’s happening to work out a payment plan, than to stay silent and think that they won’t embrace flexibility.
4. If I settle late, it doesn’t affect my credit rating
Your credit score is a silent, underlying quality that you don’t tend to think about – until you need it or are refused credit. The inputs that go into your credit record are more far-reaching than we may think, and any negatives tend to stay on your record for longer than you would hope. That’s why, even if you pay up your negative accounts, the fact you let late payments accumulate has an effect on your credit rating. This is all important when it comes to business or even personal loans, so the best piece of advice is to avoid any action that will show negatively on your credit record to begin with.
5. Debt collectors are always in the right
Bet you didn’t expect to see this one here! In the digital world when spamming is sadly a daily occurrence, don’t blindly believe that all communications about debt are real. As you’ll probably receive anything initially by email, make sure you right click on the email address to check that it’s a legitimate one. Even if it seems as if it’s from a real agency, if you’re in any doubt, give them a call and double check your outstanding invoices. There’s no better to practise the adage of ‘better being safe than sorry’.
Knowing the difference between fact and fiction is a useful ability to have in all areas of your life, hopefully we’ve added some value here by debunking some of these debt collection urban myths!