COLLECTIONS AND HOW TO ACHIEVE RESULTS
Are you tired of chasing after unpaid debts from clients? Commercial debt collections may be the solution you need to get your money back.
Discover four principles that will help you create an effective debt collection strategy for your business.
Those four principles can be summarized as follows:
- Acknowledge and proceed
- Empathize and Verify
- Get to a Result
Control is the finesse of a collection call. By effectively controlling the collection -call through communication skills, psychology, and negotiation, the business of collecting your company's money is raised to an art. It is the creativity which makes your job challenging and it is one of the "activities" that will lead to the result of collecting more money.
Acknowledge and Proceed:
Debtor objections have the potential to side-track you from your objective. Customer/debtor objections must be acknowledged which means understood. This involves the listening skills necessary to understand the debtor's objection. And it means finding a way to proceed forward. To effectively acknowledge and proceed in a collection call, you need to listen to a debtor's objection so that you understand it and at the same time develop the strategies to deal with that objection and proceed.
Empathize and Verify:
Information is the name of the game in collections. The more information you have the more tools you have in your arsenal. In conjunction with verification of the information you receive from the customer/debtor, it is critical that you establish a rapport with the customer/debtor. That rapport is developed by empathizing and understanding the problems that prevent that debtor from paying their bill. That understanding is half of the equation. You must also verify the customer/debtor's excuses.
Get to a Result:
Getting to a result means forward progress on every contact with the delinquent customer/debtor. It means having a strategy that leads to the ultimate result of recovering all your company's money. Every call you make must bring you one step closer to the result of collecting money.
You should have an internal Event Procedure Timeline for your account receivables.
The Event Procedure Timeline
- 0-30 Days Statement Sent (Statement)
- 30-45 Days Courtesy Call to customer (Call)
- 45-60 Days Past Due Letter (Letter)
- 60-75 Days 2 nd Call and Statement (Call and Statement)
- 75-90 Days Collection Call and Past Due Letter (Call and Letter)
- 90-120 Days Collection Call and Past Due Letter (Call and Letter)
- 120-150 Days Final Call Demand and Final Letter (Call and Letter)
- 150-180 Days 3 rd Party Involvement (Place with Agency)
The Event Procedure Line gives each customer a framework in which to demonstrate their intentions. The steps taken, the timing of each step, and the time frame all depend on your company's policy and staffing. But what you have done is set up a procedure that gives your customer every benefit of the doubt and lets them make the decision as to whether they are a customer or debtor.
THE WAYS A CUSTOMER DECIDES TO BE A DEBTOR
- Breaks terms of the contract
- Avoids contact
- Breaks first promise
- Finds fault with product upon payment demand
- Your competitors start calling for a credit reference
- Customer only makes partial remittance
- Ignores final 10 demand letter
- Breaks second promise
- Ignores third phone call
- Customer refuses to sign personal guarantee
These actions by a customer must be analyzed in the context of an event procedure line so that you can make an appropriate decision as how to encourage that customer to stay a customer despite their demonstrated intentions to the contrary.
Your job is to prevent these from happening and at the same time act on debtor actions when they do happen.
Revenue Assurance Partners is an outsourced commercial debt recovery agency servicing businesses throughout the United States. Give us a call at (866) 322-3328 and will provide a free consultation to address your collections needs.