Telephone Collections, Telephone Tips; Collection Tips; Collection Tools

Accounts that are even one day past due are technically delinquent.  The further past due they are, the more urgent is the need to take effective collection action. Collectors can and should make the telephone their primary and preferred collection tool.  This applies to friendly reminders, polite inquiries about payment status, or more serious negotiations involving a past due balance.

Why is the phone the best way to contact customers?  A telephone call is far more difficult to ignore than a collection letter or dunning notice, and the phone call generally takes less time than it would to generate a letter or even an email.  If the person the collector needs to speak with is not available, they always have the option of asking to speak to that person's manager. Telephone calls are the most cost-effective way of collecting from delinquent accounts. An added advantage of calling the customer rather than writing to them is that if a legitimate problem that has delayed payment, the collector can gather the information and begin the process of resolving the problem sooner rather than later.  The sooner the problem is addressed and resolved, the sooner payment will be received.

Some collectors make the mistake of thinking of their jobs as "dialing for dollars" and rather than engaging customers in meaningful discussions.  For example, some collectors will simply ask about the status of payment and make note of whatever commitment the customer chooses to makes. A more experienced collector will not a passive approach to the collection process. Instead, they will deal assertively with delinquent customers recognizing that their objective is to obtain the best payment commitment they can.

Note: If the collector is unable to reach anyone in accounts payable, they have the option of making an "end run" around A/P and speaking directly with the controller, the CFO, or even the buyer.  Effective telephone collection techniques will increase cash inflows and reduce credit risks. Some important ideas for collectors include:

• Organizing your thoughts before making the call,
• Have all the facts at your fingertips - just in case you need to refer to them,
• Have a plan in mind for the call,
• Be courteous, but firm,
• Keep calls short and to the point,
• Remain professional no matter what the provocation,
• Do not respond to anger or sarcasm in kind,
• Make regular calls --- people who call less frequently will likely to be the last creditors paid,
• Set goals as to the number of calls made, number of commitments received, and dollar value of commitments received,
• Be prepared to negotiate.  Often, creditors are willing to ship against a reasonable commitment for payment.  There is no single definition of the term “reasonable commitment.”  Each creditor must determine its own tolerance for delays in payment.
• Know how far you will want to go,
• At the beginning of the call, identify yourself by name and employer,
• Make certain that you have reached a decision maker,
• Don't be afraid to go up the chain of command whenever necessary to obtain a payment commitment,
• If you receive a payment commitment, repeat it and indicate you are making notes about it,
• Ask why the payment is late,
• Ask what you can do to get the customer to pay on time or closer to on time on their nextpaymentandonanongoingbasis,
• Always establish a follow up date for each call,
• Return as many calls as you can the same day as they are received,
• Focus on the caller - give them your complete attention during the call,
• Don't allow yourself to be distracted before or during the call; doing so will detract from your overall effectiveness,
• Take careful notes after the call about any commitments you receive from the customer
• Try never to put any customer on hold during a collection call,
• Develop some degree of rapport after calling often enough you will develop a reasonable working relationship.

One final comment:  Try to frame a discussion about a past due balance as a joint problem that you and the customer need to solve together. Doing so makes the collection call less threatening, but not less important.

© 2010 by Michael C. Dennis.  All Rights Reserved.  Mr. Dennis is a business consultant and the author of "Credit and Collection Handbook." E-mail questions or comments to him at mcdennis13@yahoo.comennis13@yahoo.com