Telephone Collections

Accounts that are past their due dates are delinquent and require collection actions to secure payments. Collections personnel can use the telephone to try and obtain payment or remind a debtor of an outstanding obligation.

A telephone call is far more difficult to ignore than a collection letter or dunning notice. If the person the collector needs to speak with is not available, the collector has the option of speaking to that person's manager in order to expedite payment. Telephone calls are the most cost-effective way of collecting from delinquent accounts. An added advantage of calling the customer is that if a problem has delayed payment, the collector can gather the information and begin the process of resolving the problem. The sooner the problem is addressed and resolved, the sooner payment will be received.

Some collectors tend to look at their job as "dialing for dollars" and rather than engaging customers in meaningful discussions some collectors will simply ask about the status of payment and make note of whatever commitment the customer chooses to makes. An experienced collector will not a passive approach to the collection process. Instead, experienced collectors 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 willing to negotiate
• 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 the decision maker
• Don't be afraid to go up the chain of command whenever necessary to obtain a payment commitment
• If you are not speaking to the decision maker, ask to be transferred to her or him
• If you get a commitment repeat it and indicate you are making notes about this commitment
• Find out why the customer payment is late
• Ask what you can do to get the customer to pay on time or closer to on time
• 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

Source: Michael Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore.