Professionally designed debt collection process flow charts simplify the debt reimbursements concept by logically portraying the recovery process.
People often go into debt to fulfill unaffordable needs; for instance, if you intend to purchase a house or car, you may opt for bank loans on certain conditions. Such amounts are considered debts. Debt isn’t confined to banks & customers; rather, it extends to individuals & companies.
The collection process of the debt often seems challenging, especially if the debtor or borrower doesn’t reimburse it timely. In this scenario, a detailed debt collection process flow chart is crucial for a better understanding of all the further steps taken. Here you can learn to design an evident comprehensive collection flow chart.
Table Of Contents
Part 1. Debt Collection Process
The concept of the debt collection process is pretty straightforward. Once the debt due period is over, the creditor attempts to approach the debtor to remind the debt recovery. If no response is made, the creditor has the right to go for different debt collection processes by involving a third-party or inducting legal action.
The debt collection process can be carried out by hiring professional debt collection agencies or any other individual to ensure the payable amount is reimbursed successfully.
How Does it Works?
Suppose the creditor or lender directly attempts to collect the debt at first; in that case, a reminder is sent to the borrower by email or phone to demand the given payment. If this strategy doesn’t work, the lender often involves third parties to reimburse the lent amounts.
If the third party is a debt collection agency, it initially identifies the entire problem to figure out all the related aspects and assigns the debt collection job to a professional collector (individual or team). The collector contacts the debtor by digital media or physically locates the borrower if the digital communication doesn’t seem effective.
The collector may suggest a flexible payment plan to the borrower. Still, if the debtor intentionally doesn’t want to pay back the due amount, then such a case is subjected to legal action. The debt collection agency regularly informs the creditor of recent updates and progress during this collection procedure.
Part 2. Understanding the Debt Collection Process Flow Charts
It’s obvious that unpaid or outstanding debts are collected via planned debt collection processes. The individual collectors or teams perform certain steps to ensure the debt is reimbursed to the creditor adequately. Flowcharts are considered quite effective in this payment collection process to perceive the intricacies of the collection process better.
Such visual representation of the debt collection process facilitates both the collector and creditor in the perception of the strategies adopted to recover the amount. The debt collection process flow charts precisely demonstrate the steps taken in debt recovery in sequential order and bring the potential limitations of the collection process to light.
🚀Other flow chart Techniques: Effective flow chart Techniques That Work
Part 3. Template Examples of Debt Collection Process Flow Charts
We have presented a few pre-designed flow diagram templates for effective analysis of the payment collection process. Such editable templates are useful for crafting customized collection flow charts as you merely need to alter the information per your requirement.
This complex collection template portrays the collection of outstanding debt in which the lender starts the amount recovery process by enforcing the judgment. Here a claim before the action letter is issued to the borrower that either results in the payment arrangement or is served on the debtor.
The debtor or borrower may have two choices in such a scenario. Firstly, he attempts to pay the debt. However, if he doesn’t respond, the lender may proceed to the legal enforcement options. This entire flow diagram depicts the collection process executed sequentially considering different perspectives.
In the given template, the basic debt process initiates when the debt collector gets a new debt account and proceeds the process with multiple attempts to contact the borrower, i.e. via email, letters, SMS etc. Then payment is negotiated for recovery. Suppose no resolution occurs, then legal action is taken, followed by a statement of liquidated claim.
The statement of liquidated claim may result in three scenarios: debt paid, default judgment and claim defended. So in case of default judgment, a court order is enforced.
In a contrasting situation, if the normal contact attempts fail, the debtor is traced using his address and a formal investigation is commenced if he gets located successfully. The process ends if the borrower can’t be located. This template can be used to demonstrate a common debt-collection process in which the creditor can go for legal action against the borrower if he doesn’t pay the debt even after the due date.
Part 4: A Top-Notch Tool to Design Debt Collection Process Flow Charts
The market analysis reveals numerous tools that can be employed to accomplish the flowchart designing needs, but not all guarantee excellence. The payment collection process flow charts encompass multiple interrelated steps that must be visualized clearly. In this connection, EdrawMax seems the most optimum choice that lets you design the collection flowcharts on different complexity levels with a single click.
It’s an all-in-one diagramming solution enriched with advanced AI features. You can also access its vast templates community to reuse the editable templates of collection flow charts. So, you can confidently opt for EdrawMax to enhance your flowchart designs.
How To Craft a Debt Collection Process Flow Chart Using EdrawMax?
The EdrawMax assists you in designing a detailed debt collection process flow chart by presenting variant choices. Even though customizing pre-built templates is a highly feasible approach, you can still generate the required collections flowchart by employing EdrawMax’s AI features to experience more convenience. A detailed procedure is given here to get an AI-generated collection flowchart using EdrawMax.
Launch EdrawMax Online and click the top blue-colored tab to access its AI Assistant.
Select the option Create Flowchart in the appeared AI Assistant’s window.
Enter the flowchart query Debt Collection Process Flow Chart in the AI Assistant search bar.
The AI EdrawMax will instantly create a debt collection process flowchart after executing the entered command.
The AI-generated flowchart can be further enhanced by changing its appearance. You can access the top menu bar or right panel menu to do so. You can also change the textual information of the flowchart as per your scenario.
To save your flowchart in any desired format, i.e., PDF, Graphics, Visio, SVG, etc, click the Export icon located at the top.
For instance, if you proceed with the Export to Graphics option, you need to further enter the required information in the given fields. Then click on the Export button.
Part 5: FAQs
Q: Who is the debtor and creditor?
A: The creditor, also known as the lender, is the individual or company that gives an amount to someone on a specific condition, while the debtor or borrower is the entity that takes loans for a limited period from the lender.
Q: What are the steps in debt collection?
A: The debt collection process encompasses the following key steps:
- Contacting the borrower
- Issuing the letter containing the debt amount value
- Late payment demand
- Court Action
- Issuing judgment
Q: What is the purpose of debt collection?
A: The primary purpose of the debt collection process is to recover the amount that someone takes from an individual or company for a limited period and doesn’t pay back in due time.
Q: How do companies collect debt?
A: Companies-oriented debts indicate heavy amounts, and to collect such debts, companies often hire professional payment collectors to initiate the amount recovery process. The collectors then approach the borrower and ask to pay back the due amount.
Q: What are debt collection activities?
A: The debt collection process may involve several activities based on the situation. For example, if the lender personally tries to recover his amount, he will notify the borrower formally. Likewise, professional collectors may trace the borrower or take legal action in adverse situations.
Debt is considered the amount someone borrows for a certain time period. The lender contacts the debtor for amount recovery once the due time is passed. In case the borrower doesn’t return the debt amount, the lender goes for particular debt collection processes. Against this backdrop, a detailed debt collection process flow chart assists in understanding the major steps involved in debt recovery.
Here you can get insights into a few efficient editable collection flowchart templates that can be customized as needed. Additionally, we have comprehensively illustrated how to design it creatively in any given scenario.