At Access Mercantile, our collections team is responsible for resolving complex debt recovery matters— some requiring the careful negotiation of a debt settlement. In these cases, settling for a reduced amount can be a more practical and beneficial option than pursuing full debt recovery, particularly when financial circumstances make full repayment unlikely. While debt settlement is a common practice in the industry, many agencies adopt a blanket approach—running generic campaigns that offer settlements with little consideration for risk, financial profiling, or client-specific needs. This can lead to missed opportunities and suboptimal outcomes for both creditors and debtors.
At Access Mercantile, we take a more strategic and data-driven approach. By leveraging our risk assessments and propensity-to-pay profiles, we identify the right debt and customer segments where settlement offers are most effective. This ensures that any negotiated resolution aligns with our client’s objectives, maximises recovery rates, and provides mutual benefits to all parties involved.
Why is Debt Settlement a good idea?: A Smarter, More Targeted Approach
Higher Likelihood of Recovery – For debtors experiencing financial hardship, a negotiated settlement increases the chances of securing at least a partial repayment, rather than risking non-payment altogether. This also allows debtors to move forward without the burden of unresolved debt.
Improved Cash Flow –Different business have varying liquidity needs, settlements allow businesses to receive funds more quickly compared to prolonged recovery efforts, improving cash flow and overall liquidity removing financial uncertainty.
Lower Collection Costs – Legal action and extended recovery processes can be expensive. A settlement avoids additional legal fees, collection agency costs, and administrative expenses.
Avoiding Legal Risks – Full recovery efforts sometimes lead to disputes, counterclaims, or even debtor bankruptcies, which can delay or eliminate any potential payment. A settlement mitigates these risks.
Preserving Business Relationships –Debt accounts from current or past customers and business partners, a negotiated settlement may help maintain goodwill and allow for future business opportunities.
Reducing Administrative Burden – Chasing full payment requires significant time and effort. A settlement allows teams to focus on core business operations instead of prolonged recovery efforts.
Market and Economic Conditions – If economic conditions are unfavourable, waiting for full payment might not be practical, as the debtor’s financial situation could worsen over time.
Need Help Structuring a Settlement Strategy?
If you’re looking for expert guidance on structuring a settlement strategy for your outstanding debtors or want to explore different collection strategies, our team at Access Mercantile Services is here to help.