News for Credit Professionals       NACM-SE



ARE YOUR RECEIVABLES PERFORMING?
10 Tips for Successful Collection Calls

Getting paid on time by customers is an important component in the success of any company. Past due bills left unattended erode company profits and can eventually lead to the failure of your business.

Handled effectively, telephone collection calls are a great opportunity to remind the customer of the need to pay on time and can even be an opportunity to promote future sales. Handled badly, the same calls can alienate customers and cause friction between the credit department and the sales team.

1:  KNOW YOUR CUSTOMER
Before you pick up the phone make sure you know important facts about your customer, such as:
A. Are they a large, medium or small business?  This is important because the size of the company will determine who your payment decision maker will be.  The smaller the company the higher the level of the decision maker.  For example, in a very small company the decision maker will probably be the president of the company or owner.  In a medium size company try to reach the controller or general manager.  In a large company you should reach the accounts payable manager or supervisor.  Remember, if you don't involve a decision maker, don't expect a decision.
B. What is their payment history with your company? The history of the customer's payment record may help you understand why their account is past due. If they usually pay on time, but have not on this occasion, there may be a dispute or grievance. In this instance, be sure to check with the customer that there is not a problem before you demand payment. If the payments are getting slower each month your customer may have a cash flow problem and a more assertive approach may be needed.

2:  HAVE A POSITIVE ATTITUDE
Calling customers and reminding them of their unpaid bill is not always a fun filled task. But it never has to be an unpleasant experience. Be upbeat and professional.  Your mood will be contagious.  If you sound interested and enthusiastic about your job you are much more likely to get a positive and satisfying result.  Remember if you don't sound interested in what you are saying the other party will not be interested in hearing it.

3:  BE AN ACTIVE LISTENER
As soon as you get through to your customer, listen, listen, listen. Be sure to make a note of their full name for use during the call and for any future communications.  Listen to the mood of your customer.  Their mood will to some degree affect the pace and tone of the call. Listen to what they say and don't say "cutting a check does not necessarily mean a check is in the mail". Take thorough notes as this will keep you focused and an active listener throughout the call.

4.  ASK THE RIGHT QUESTIONS
One of the most common questions asked by collectors is "When will you be sending the check?"  This is not an effective opening question as it relinquishes control of the outcome to your customer.  The only time to ask a customer when they plan to send a check is when you are not concerned by the answer they give you.  if all you are doing is cash forecasting the question is fine, but if you are trying to facilitate timely payment it is not.  A better way to pose the question is:  "Will you be sending payment today?" or "Will you be sending payment this week?" or even state assertively that "We will expect your payment by the end of the week."

5.  FOLLOW UP PROGRESSIVELY
Each successive call should become more aggressive and assertive.

     First call:  Benefit of the doubt. Most of your customers are honest and want to pay within terms. A simple reminder may do the trick.
     Second call:  Assertive and firm. This call should communicate to the customer professionally and assertively that the account is past due and immediate payment is expected.
     Third call:  Consequences. Some customers will only pay when reminded of the consequences of their inaction.

6.  ALWAYS KEEP YOUR WORD
Credibility is one of the most important aspects of a collection call. Your customer must always believe you mean what you say. If you promise action will be taken on a certain date you must take that action, or don't say it. Also, be sure that other departments, and authorities, within your company support your actions. There is nothing worse than telling a customer a certain course of action will happen only to be overridden by another department or authority.  Remember, when people know that you always do what you say, they will take you very seriously.

7.  ALWAYS REMAIN CALM
Do not allow an angry customer to aggravate you. Some customers think the best defense is a good offense. They will become angry to deflect you from your goal of getting paid. Do not be tempted into an argument as this cedes control of the conversation to the customer and provides another reason not to pay.  Remain calm and focused.  Your customer owes the money and you have every right to expect and demand payment within the terms agreed.

8.  GET A COMMITMENT
Your ideal collection call will result in the customer committing to payment in full today. But even if that is not possible, get a commitment to something!  Any call that does not result in a commitment for payment or a commitment to call you back with a payment date is a wasted call.  Always get a promise for something so all your calls will have value.

9.  SUMMARIZE YOUR CALL
Did you ever receive a payment promise and the check never showed up?  If so, perhaps the customer forgot about your call the moment they put down the phone or they decided that you were not that concerned about the outcome. Summarize the agreement, point by point, at the end of the call to leave no doubt in your customer's mind of your expectations.  If the agreement is overly complex, be sure to memorialize the agreement in writing.

10.  BE EFFECTIVE
Making 50 calls a day may be an efficient call rate, but if none of the calls resulted in payment it was not effective or productive. Quality, not quantity, is the goal.  This way each call will be worthwhile and your success rate will be high.

Remember that you are dealing with a customer and will probably be doing future business with them.  Working together with your customers will get you paid and get you more business.

NACM-SE Collections Services Division can assist your company with non-performing receivables
www.nacm-se.com/collections.asp