In the face of today’s economic uncertainties, it is more important than ever that companies can count on trusted business relationships. But even when they know their customers well, there will always be some that struggle and fail to pay outstanding invoices.

Our trade credit insurance solutions are a lifeline in such cases, indemnifying policyholders against invoice defaults, and stepping in to help with the complex and time-consuming process of recovering debts. We apply unrivalled expertise to every stage of that collection process. No matter where in the world a debtor is located, our investigators, negotiators and legal teams help to recover outstanding payments efficiently and in the shortest possible timescales.

To show how that looks in practice, we asked two highly experienced collection officers from Allianz Trade in the USA – Darrel Austin, a recovery specialist for pre-legal collections, and Donald Pope, a senior coordinator in our legal collection department – to share insights into their work and the benefits this brings to clients.

Darrel Austin,  
Recovery Specialist for Pre-legal Collections, Allianz Trade in the USA

Donald Pope,  
Senior Legal Coordinator, Collections, Allianz Trade in the USA

“The primary role of the collection team is to act as an extension of your credit department,” says Donald. “It takes over when a customer is well-overdue with a significant payment. And in doing so, our experts relieve busy finance teams of the burden of bad debt recovery, saving your company time and money.”

We apply a professional and proven model designed to recover outstanding funds, escalating activity when required.

At the outset, we alert the debtor to the fact that Allianz Trade is now appointed to collect the debt and stresses the need for a quick and positive resolution. However, if that proves fruitless, a collection specialist – such as Darrel – is appointed to the case, who takes a deep dive into the debtor’s background and trading status, drawing on a mix of official company records, detailed online research and locally-gathered intelligence.

The starting point is always understanding the situation – whether the unpaid bill is for $20,000 or $200,000. As Darrel highlights: “The more information you have, the better off you’re going to be. As I learnt early in my career, information is knowledge, knowledge is power, and power leads to the money.”

That knowledge, coupled with our expertise, allows us to address many of the pain points that our clients encounter when they try to collect bad debts themselves. Those challenges include finding ways to access the key decision-makers, assessing the debtor’s ability to make payments, setting appropriate deadlines, and knowing how any associated laws can be applied – while always striking a balance between firmly insisting on the matter being resolved and the need to maintain a positive customer relationship.

“An important part of that information-gathering involves knowing who to target to encourage payment – often the CFO or CEO themselves – and how to get their attention,” he says. “But the approach also has to be diplomatic and respectful. After all, in many cases, these are our client’s valued business partners,” he points out.

“Some clients expect us to go in softly, with more of an ‘audit approach’, because they have a relationship they want to preserve,” says Darrel. “You have to be passionate about helping the debtor to pay and have an open mind, so you understand why they are struggling to do so.”

Armed with that insight, he says he can explore options to reach a payment arrangement or settlement. “But there is no magic wand. You need to judge the possibilities from the debtor’s situation,” says Darrel.

On the other hand, those possibilities may simply not exist, and our teams will draw on their expertise, built across many thousands of cases, to judge when all avenues of pre-legal collection are exhausted — most commonly, when the debtor refuses to co-operate or claims they can’t or won’t pay.

“If a debtor avoids contact, then I have to assume that they don’t want to resolve the situation voluntarily. So I’ll have to do my job, and refer the case to our legal department, which then consults with the client about whether they want to escalate the case,” outlines Darrel. 

“That is when our legal debt collection experts take over,” explains Donald. “As legal coordinators, our role is to select a qualified attorney who has the knowledge and experience to represent the client’s interest. Then, throughout the entire legal process, we manage the relationship between the attorney and the client.”

That can involve making recommendations on different courses of action at different stages. “The main options are whether to sue, accept a settlement or close the case as uncollectable debt,” says Donald, who brings 35 years’ experience to the role.

Most commonly, the goal is to resolve a case in the shortest possible period, and “in 30% to 40% of cases, the demand for payment from the attorney results in a payment arrangement,” he adds. “Only in about a quarter of cases do we file a lawsuit, but that should always be the last resort because it’s expensive and very time-consuming. Cases can drag on for years. So, the legal coordinator and the attorney will always seek the client’s authority to negotiate a settlement that’s in their best interest,” says Donald.

That highlights some of the elements that set our collection services apart from much other debt recovery.

“Allianz Trade stands above every other agency I have known during 40 years in the collection business,” says Darrel, pointing to the company’s robust processes, its focus on client service, a deep-rooted professionalism and its global presence.

We have local expertise in more than 55 countries around the world. That means clients don’t need to be experts in the collection practices and legal subtleties of other countries. When seeking to recover a debt internationally, the collection officer in their home country will guide them through the process, while the team in the debtor’s country will pursue the matter locally. That mix of local and global support and expertise allows our clients – wherever they are based – to recover outstanding payments.

“As a team, we have all the tools and support we need to collect,” says Darrel. “That extends from ‘skip tracing’ services and investigative firms for finding debtors whose activities have become opaque, through to specialist insolvency teams who take over the recovery if a supplier files for bankruptcy,” he says.

A key task is to keep the client informed at all times. “Our goal is to always be engaged with the client, so they fully understand the process and the status of a case,” says Donald.

Darrel also tries to convey to clients that it is in their interests to act in a timely fashion. “We encourage clients to recognise a debt early. Some clients (especially in the US) allow the debt to sit for three to six months or even longer before they call us in, which can make the collection job tougher.”

Clearly, what has made the job more difficult over the past year is the Covid-19 pandemic and the ensuing economic fallout. It is a situation that has made having access to a professional debt collection service an even more important asset for our clients.

“Last year was a very trying year,” says Darrel who saw the number of debt cases he manages jump fourfold. “Some debtors, especially those who realised they needed to continue as a valued customer to one of our clients, did pay their bills. But there are many industries that haven’t been doing a whole lot of business due to Covid-19. In those cases, we have still managed to structure payments to keep the case away from legal action,” he says.

Not that legal action has been an easy option. “The pandemic has not been good for legal collections in the US,” says Donald. “All civil cases were paused when the country shut down, which has created a huge backlog in the courts. At the same time, many businesses were forced to close, which caused defaults and delays in payment arrangements as many debtors had little or no income.” But he cautiously predicts that those challenges will ease as economic activity bounces back.

As that occurs, the collections process will increasingly be made more efficient and predictable by advances in digital technologies. For example, we are exploring how artificial intelligence can be used to more accurately forecast the likelihood of a client’s specific debts being paid.

Whatever the scope of the opportunities and challenges, the commitment by the team to collect on the client’s behalf seems unshakeable. As Darrel says: “The reality is you may not be able to collect everything, every time. But you give it your all – on every single account.”