Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Lashanda Mackey
Reviewed date: 2025-09-04
Next review date: 2026-09-04
The objective of this SOP is to establish detailed, step-by-step guidelines for managing retired delinquent clients in the Credit & Collections Department. This ensures effective and compliant recovery of outstanding debts while maintaining professional and respectful interactions, aligning with the Policy for Management of Retired Delinquent Clients.
This SOP applies to all employees involved in credit and collections activities within Easyterms who are responsible for identifying, communicating with, negotiating with, and documenting interactions related to retired clients with outstanding debts.
4.1. Credit & Collections Department: Responsible for developing, implementing, and maintaining the procedures outlined in this SOP, managing client communications, negotiating settlements, and ensuring compliance.
4.2. All Employees Involved in Collections: All employees involved in managing retired delinquent clients must strictly adhere to the "Policy for Management of Retired Delinquent Clients" standard operating procedure and all relevant legal and regulatory requirements governing debt collection practices. They are responsible for understanding and following this policy and related procedures, conducting professional interactions, and accurately documenting all actions.
5.1.1 Maintain Client List: The Credit & Collections Department will maintain a dedicated, up-to-date list of all retired clients who have outstanding debts.
5.1.2 Regular Review: This list will be regularly reviewed (e.g., weekly/monthly) to identify accounts that have become delinquent based on established criteria (e.g., 30/60/90 days past due).
5.1.3 Cross-Reference: Cross-reference identified delinquent accounts with the company's client status records to confirm the client's retired status.
5.2.1 Draft Notification Letter: Once a retired delinquent client is identified, a formal notification letter will be drafted by the collections department.
5.2.2 Content of Letter: The notification letter must include:
Clear details of the outstanding debt (original amount, current balance, due date).
Available payment options (e.g., online portal, bank transfer, installment plans).
Contact information for the Credit & Collections Department (phone number, email, hours of operation).
A clear call to action and a deadline for response (e.g., "Please contact us within 7 business days").
5.2.3 Final Demand Letter: The letter will be sent via email with read receipt to the client's last known email address see letter under templates.
5.3.1 Scheduled Follow-up: If no response is received within [e.g., 10 business days] of the initial notification letter, a follow-up call will be made to the client.
5.3.2 Call Protocol:
Identify yourself and the company clearly.
Politely remind the client of the outstanding debt.
Reiterate payment options and inquire about any difficulties preventing payment.
Discuss potential repayment options or arrangements.
Maintain a respectful and empathetic tone throughout the conversation.
5.3.3. Documentation: All communication with the client (calls, emails, voicemails) will be meticulously documented in the client's account notes, including date, time, contact person, summary of discussion, and agreed-upon next steps.
5.4.1 Assess Financial Difficulty: If the client expresses financial difficulties, the collections officer will assess their situation to determine eligibility for a settlement plan or payment arrangement.
5.4.2 Propose Options: Based on the assessment, propose suitable settlement plans (e.g., reduced lump sum, extended payment terms, installment plans).
5.4.3 Documentation of Agreement: Any agreed-upon settlement or payment plan must be:
Documented in writing using the Promissory Note approved.
Signed by both the client and an authorized representative of Easyterms.
Filed in the client's digital and/or physical account records.
5.4.4. Provide Retirement Letter (if applicable):
If the client requests a formal letter confirming their retired status for internal or external purposes, the Credit & Collections Department will facilitate the provision of such a letter upon verification of their status and account.
5.5.1. Review Criteria: If the retired delinquent client fails to respond to multiple attempts at communication or adhere to agreed-upon payment arrangements, the case may be considered for legal action. This step is a last resort.
5.5.2. Internal Review: The collections officer will prepare a summary of the account history and all collection attempts for review by the Credit & Collections Department Head.
5.5.3. Legal Consultation: If approved by the Department Head, the case will be referred to the legal department or external legal counsel for assessment of viability and compliance with local debt collection laws and regulations.
5.5.4. Initiate Legal Process: If legal action is approved, it will be pursued in strict compliance with all applicable laws and internal legal protocols.
5.6.1. Unsuccessful Attempts: If all attempts to recover the debt (including negotiation and potential legal review) are unsuccessful, and the debt is deemed uncollectible, the case will be escalated.
5.6.2. Senior Management Review: The collections officer will prepare a comprehensive report detailing the account history, all collection efforts, and the reasons for recommending write-off. This report will be submitted to senior management for final review and approval.
5.6.3. Write-Off Procedure: Upon senior management approval, the debt will be formally written off according to the company's financial write-off procedures.
Promisorry Note (see LMS)
All Finance Officers/Accountants, Loan Officers, and Branch Managers will receive mandatory training on this SOP, the Credit Policy, and the Debt Collection Policy annually or upon significant revisions.
This SOP will be periodically reviewed (at least annually) and updated by the Credit & Collections Department to reflect any changes in company policies, relevant laws and regulations, or identified best practices in debt recovery.