The Nine Essentials of a Successful Collection Call
You Must Be on Top of Your Game When Dialing for Dollars
Successful collections require the coordination of a variety of activities: timely and accurate invoices and payment posting, monthly statements, email reminders and other dunning notices as well as telephone calls. Of all these items, making the necessary phone calls generates the greatest value in respect to recovering past due invoices.
While all these things can be very effective in the soliciting of payments for a large proportion of your receivables, especially when automated, there will always be situations where you will not get paid until you pick up the phone and call the customer. Furthermore, if you aren’t prepared and instead just shoot from the hip, you won’t get paid all that the customer can afford.
A Cautionary Tale…
As a corporate credit manager, I periodically was tasked with other finance department activities. Once, I was given the responsibility for disbursing checks while the controller was on a three week vacation. The company had maxed out its line of credit and so was having some cash flow difficulties. Since I knew how much cash was coming into the company, all the incoming collection calls were routed to me so I could manage the disbursements.
As it turned out, minimizing disbursements was very easy. This was because almost nobody pressed me for full payment. If a supplier had us on credit hold, I’d offer to send the check for their oldest invoice the following week. If they pressed, and most didn’t, I would release the check the next day. If none of our orders were on hold, I would offer to pay in a couple of weeks. Most of the collectors seemed relieved I was cooperating and accepted my initial offer.
In fact, there was only one collector that tried to collect everything owed, and I was able to get them to accept three payments over the next five weeks. There were maybe three other collectors who pressed for additional payments, and they were easily mollified with promises that were short of the full balance owed. By the time the controller returned, I had manage to build up our cash reserve by several hundred thousand dollars and keep all our suppliers happy.
The point is, almost all of the collectors (there were dozens) were content to leave money on the table. None asked open ended questions. All but one asked for the full amount. Few seemed fully prepared. Instead of giving them an excuse, I preempted most of them by offering a partial payment several days hence. Expecting push back, they jumped at the opportunity to be paid less than they could have gotten, thanked me, and went on to their next call — classic examples of ineffective collection techniques.
To continue reading and learn the 9 elements that contribute to collection call success, you’ll need to be a paid subscriber to Your Virtual Credit Manager…our standard subscription is only $5 per month or $49 annually.
Do you need help collecting past due receivables or understanding your customer portfolio risks? The experts at Your Virtual Credit Manager are currently offering 33 percent off our standard small business consulting rates.
Readers of Your Virtual Credit Manager can access sharply discounted business credit reports from D&B, Experian, or Equifax through our partner accredit.
Please share this newsletter with your small business customers . . . it just might help them collect faster and pay you sooner.