Pre-collection and collection are two approaches that businesses use to collect overdue payments from customers. While both approaches involve reaching out to customers who have missed payments and providing them with the opportunity to pay their outstanding debt, there are some key differences between the two.
Pre-collection
Also known as early-stage collections, is a proactive approach to debt collection that involves reaching out to customers who have missed one or more payments but have not yet become seriously delinquent. This typically involves sending reminders to customers, as well as providing them with information about how to make their payment. Pre-collection is typically used for debts that are not yet seriously delinquent.
Collection
On the other hand, is a more reactive approach to debt collection that is used for debts. This typically involves more aggressive efforts to collect the debt, such as hiring a collections agency. Collection is typically used for debts that are unlikely to be paid through pre-collection efforts.
One of the main differences between pre-collection and collection is the timing of the efforts. Pre-collection is typically used earlier in the debt collection process, while collection is used later on. This means that pre-collection is often less aggressive while collection is more focused on recovering the debt.
Pre-collection is generally more successful at collecting debt, as it is used earlier in the process and customers with the support and information they need to pay their outstanding debt. Collection, on the other hand, is often less successful, as it is used for debts that are more difficult to collect.
Conclusion
Pre-collection and collection are two approaches that businesses use to collect overdue payments from customers. A proactive approach that is used earlier in the process and focuses on maintaining good relationships with customers. Both approaches have their advantages and disadvantages, and the right approach for a business will depend on its.
