Positive Effects of Covid-19 on the Debt Collection Market in Turkey
Many difficulties as well as opportunities have entered into our lives with Covid-19. In this content we are going to discuss an important subject. Effects of covid-19 on the debt collection market in Turkey is our subject. Businesses have faced the outcomes of the pandemic since March 2020. Thus the market of debt collection has also evolved.
Meanwhile I’m the founder and manager of ARS Consultancy. ARS Consultancy is the leading debt collection agency in Turkey. On this occasion, I had a chance to monitor the changes in the Turkish market closely. With this article, I would like to share 2 main changes. We have observed these 2 changes based on our experiences. We made effects of covid-19 on the debt collection market observation with our debt collection experts in our team. In addition, this team operates internationally.
After Effects of Covid-19 on the Debt Collection Market, Written ‘Agreements’ Become More Important
Before the pandemic, not all international export & import companies were making a written agreement with their Turkish customers. Especially in some sectors, a contract may be perceived as a ‘slowing down’ item. However, no matter in which sector companies are operating, making a plain and simple contract is a strong tool. After effects of covid-19 on the debt collection market we saw that some Turkish debtor companies or individuals did not pay. The reason they put forward for this was ‘covid-19’. We saw that they started to evaluate the epidemic as ‘force majeure’.
Not only in Turkey, but all around the world, this development has actually been an issue actually. At that point, we, as the collection agency playing a mediator role. And our role is between international creditor and the Turkish debtor. We checked if there is any agreement between two parties. Mostly, there were no agreements between parties. Even if there was, terms and conditions were not clear about the status of this pandemi. Of course, this conflictual issue has caused a delay in payments. But with a careful review of the developments, we have mostly managed to bring two parties. We achieved this in a reconciliation table where payment agreements were reached.
After effects of covid-19 on the debt collection market Turkish export and import companies have become more sensitive not to trade without a written contract. Hopefully, the importance of written contracts will continue to be remembered. It is indeed a strong tool to minimize non-payment risks in the debt collection industry.
Online Meetings With Debtors Become More Usual
There are several tools for debt collection and face-to-face meetings have always played a considerable role in addition to phone calls, emails and direct mail by cargo. On the one hand, face-to-face meetings are the most effective way to manage a successful debt recovery. On the other hand, it is the most expensive tool, considering the costs of a site visit, time and effort.
After effects of covid-19 on the debt collection market, virtual meetings with debtors located in various parts of Turkey have become a strong alternative. Of course, our foreign clients could also make online meetings with their customers in Turkey. But speaking the native language with the Turkish debtors makes a huge difference in order to build a healthy communication for understanding the reasons for non-payment. Therefore providing solutions before legal action becomes easier. Either a payment plan is agreed, or a settlement is made within approximately 3 days after we make an online meeting with Turkish debtors.
After effects of covid-19 on the debt collection market, what we see is this; new debt collection claims have a higher chance of recovery in a shorter timespan, thanks to the possibility of online meetings with Turkish debtors after ‘Covid-19’. Yes, virtual meeting was still an option before the pandemic, but nowadays, we are all more used to it and even the most conservative people are more open to online gatherings.
More and More Changes Are About to Come
After effects of covid-19 on the debt collection market, what we see is this; new debt collection claims have a higher chance of recovery in a shorter timespan, thanks to the possibility of online meetings with Turkish debtors after ‘Covid-19’. Yes, virtual meeting was still an option before the pandemic, but nowadays, we are all more used to it and even the most conservative people are more open to online gatherings. are not limited to these two issues indeed. I wanted to share the most significant changes which positively affected our debt recovery activities.
In addition, international trading companies started to make more in-depth investigations with their potential new clients before they jump into a business. Because the pandemic has shown all of us the importance of working with reputable and financially strong companies which are more likely to survive difficult times.
Similarly, cash-flow management has regained its value and more fresh cases have started to be placed at debt collection agencies. After effects of covid-19 on the debt collection market, digitalization of debt collection activities have also increased. And clearly, more changes are on its way, which will be the topic of my future articles. Wish you all to collect your receivables on time, but if not, we are here to help in Turkey.
Ayse Burcu Arslan Demirtas
Managing Director | Founder