Debt Collection 101

By Michael Dennis
Source: www.coveringcredit.com


Delinquent customers find it easier to deflect criticism of their company's payment problems if they hear the same approach from debt collectors every time. It is important to give your collection staff new ideas and new approaches to collection that are unique enough to get the customer's attention without being unprofessional. Here are some collection techniques to consider:

• Instead of leaving a voice mail message, ask the operator for the accounts payable manager's name and fax number [if you don't already have it on file]. Fax this person an account statement along with a short note asking for a return call with payment status.

• If a customer is seriously delinquent and finally makes a payment commitment, tell the customer to hold the check and arrange for a courier to pick it up [assuming the balance due is substantial]

• If an account is seriously delinquent and you have a personal guarantee on file mention this to a decision maker at the debtor company – but emphasize that exercising the personal guarantee would be something you would prefer to avoid. Sometimes, a veiled reference to the personal guarantee is enough to convince the customer to pay you.

• Sometimes, when customers claim checks must be ‘lost in the mail’ they refuse to place a stop payment until a specific number of days have gone by. To avoid this delay, offer to reimburse the customer for the stop payment fee in exchange for an immediate payment.

• Don't be shy about asking the salesperson to become involved if an account is seriously delinquent. The salesperson has a vested interest in keeping the relationship alive. Just be certain he or she knows not to negotiate for payment on behalf of the company. The salesperson's role is to open a ‘second front’ by asking the purchasing department to pressure accounts payable to issue payment.

• Rather than leaving a message for accounts payable when you get their voice mail, if the call is important call back and ask the company operator to have your contact paged.

• Frequently, the accounts payable representative’s voice mail will indicate that callers can contact a specific person "IF the call is an emergency." Even if it is not an emergency, contacting this person will usually accelerate payment.

• Prioritize calls in descending dollar order, not based on age.

• Don't allow the customer to leave you on hold for more than five minutes. Why? Because if you are on hold for more than five minutes in reality you are on Ignore. Hang up, call back and start all over again. Don't apologize for calling back. Instead, tell accounts payable that you must have been cut off.

• Never require a customer to pay a balance that is legitimately in dispute…and never allow the customer to withhold payment on that portion of the invoice that is not in dispute.

• Discourage unearned discounts by routinely charging them back…but don't spend an inordinate amount of time chasing down repayment.

Not every technique works every time with every customer…but all of these ideas work some of the time.