After running my own collection agency in Tokyo for 12 years (1992 - 2004), there is one thing that I learned from the debtors that have the will and volition to pay but not the means. The agent should try to provide "a payment route" for the debtor.
Well, what does this mean, "a payment route". It means that if the debtor is unemployed or his business is struggling and doesn't have the means to pay off the debt, then the agent should try to find a way for the debtor to minimize his expenses and generate income. Needless to say, this can be a tall and quite a different order to fulfill.

A little background on Japan's economy: After the economic bubble broke in 1991 until about last year, Japan's economy was basically dripping along through a deeply entrenched recession. Blue chip companies that hired employees for life were now laying them off in the hundreds of thousands, and for the first time in post war Japan the employment system began to crumble. Not only were companies laying off their employees but for a couple of years, companies themselves were going bankrupt by the tens of thousands per month. As a response to this massive unemployment and bankruptcy situation, the number of executive search firms and turn-around management companies greatly proliferated.

Not sure about what your experiences have been, but for me it's unproductive talking with debtors who are struggling just to pay their apartment rent or staff's salaries when they just don't sincerely seem to have the income. So what's a debt collection agent to do when confronted with this type of situation? Here's a thought from my own experience in Japan .

For individual debtors who were unemployed with very little or no income coming in, we first confirmed if they were serious about finding a job. If they were then we proposed to them to come to our office where one of our resume writing consultants sat down with the individual, and while consulting with them about their previous employment experiences, helped them to write or rewrite their resume. Subsequently, the candidate was introduced to the most appropriate job search agency with whom we have forged a working relationship. With some luck, a position was found and the terms of employment called for a portion of the monthly salary to be paid to the creditors. In this way the debt was gradually paid off. The result was, rather than suing on a debt that would still not matriculate into cash, the creditor received their monies in full (albeit slowly).

How many of you have ever sat down with a debtor and helped them with their resume, let alone tried to help that debtor become employed?. Is it possible you could imagine your collection agency actually setting up some kind of support program to help debtors who want to find work? If you think this is an idea worth exploring, talk it over with the executive search firms or employment agencies that you know. You never know what talent people have when they come walking through your door.

Collecting doesn't mean you must continuously badger the debtor to pay even if they can't. Instead, it means you might want to put your credit counseling hat on and look for ways to help the debtor. I do understand that this idea goes against our natural collection instincts. However many people want to pay but they just can't since their situation has become so out of control. They need to hear of some kind of payment route that will lead them out of debt.

I'm not recommending this idea for every debtor but only those individuals who are truly sincere about getting employed. Another way to look at this idea is that rather than putting someone out on the street, it's more socially responsible to help a person with debt problems to return to society as a constructive, productive, and tax paying member.

For debtor companies having financial problems that are also serious in resolving them, think about putting your turn-around management hat on. Like individual debtors, many commercial debtors also need assistance through management and operational changes and support that lead to a payment route. At my company in Japan, we aligned ourselves with turn-around management consultants who worked with some of the commercial debtors to completely overhaul their operations, find new customers, liquidate inventory, bring in new management through stock ownership, and provide any other creative idea that would minimize expenses and generate cash flow.

Even one simple suggestion can alleviate a huge cash flow problem. For example, one of the commercial debtors that we were trying to collect from had over $300,000 in outstanding overseas receivables itself. Rather than waiting for this debtor to pay us when he was finally paid, they accepted our proposal to collect their overseas receivables. Upon receiving the remittances, the creditor's balances were completely paid off, the debtor's cash flow situation was greatly improved, and if I may say, our agency received commissions from all sides as well.

Although I do not recommend the above approach to collecting a debt to every single indivual or commercial debtor but only to those in which it will apply. Sometimes just providing that extra creative step can open up that payment route that will ultimately help to satisfy a debtor's payment obligation.
I hope the above has given you food for thought to diversify and enhance your agency's present collection system.