Collection Techniques

Here are some “always” collection tips:

• Always ask about the status of payment of the entire past-due balance including invoices and customer deductions.
• Always ask when the customer’s payment was mailed—not when their payment is scheduled to be mailed.
• Always make a second effort at resolving a past due during a collection call, even when your first attempt was rebuffed. You have very little to lose and much to gain by making one last attempt at getting a reasonable commitment from the debtor. Even if this approach works only 5 percent of the time, it is still worth trying.
• Always remember that debt collection is competitive. Your company is in competition with every other vendor for payment from customer because customers often have insufficient cash and must therefore allocate cash between and among their creditors.
• Always include a copy of the Proof of Delivery if possible when a customer requests an invoice copy. Doing so eliminates a second reason or excuse for delaying payment.
• Always ask for a detailed explanation when a customer says they cannot or will not accept copies of supporting documentation and demands that you mail originals. This is often a convenient excuse to delay payment.
• Always ask for more than you expect to receive from the debtor’s A/P department. If you get everything you asked for, even better.
• Always ask to be transferred to speak to the final the decision maker if the person you are speaking to cannot negotiate a reasonable payment schedule.
• Always ask your cash application person or department to call customers that have not provided supporting documentation to request that they send the needed information and documentation immediately.
• Always assign a credit limit to customers with COD terms.  COD is actually open account terms until the customer’s check clears.
• Always document broken payment commitments for future reference.
• Always be prepared to compromise by accepting less than payment in full once you are convinced that you have received the debtor’s best offer.
• Always try to be upbeat during collection calls.  Both enthusiasm and apathy are contagious.
• Always be willing to accept help from any source in your collection efforts including but not limited to assistance offered willingly or reluctantly by your own sales department.
• Always become progressively more assertive the further past due an account becomes.
• Always paraphrase, clarify and summarize what was said or agreed to prior to ending a collection call.
• Always try to avoid confrontations. Confrontations with customers usually do not result in payments being received sooner.
• Always call delinquent customers as often as necessary to get a commitment for payment—provided that you do not call so frequently that your actions would be considered harassment.
• Always confirm all payment agreements more than 10 days in the future in writing. With commitments more than ten days out, it is possible the debtor will forget to pay as agreed if they do not receive a written reminder.

© 2011 by Michael C. Dennis.  All Rights Reserved