This is a guest post by Michelle Dunn, author of an award winning book who has spent the last 18 years stepping into dangerous debt collection potholes.
If you have outstanding receivables, now is the time to take action. To begin, train yourself or your collectors or credit manager in debt collection tasks. Developing a telephone voice is incredibly important for successful debt collection. Here are the keys.
- Refining Listening skills: When you call a debtor and you state the reason for your call or ask a question, wait for them to answer. No matter how long the pause is, let them break the silence.
- Managing the emotional side: Debtors will get upset that you are calling them. They will cry, yell, swear and hang up on you. When a debtor starts telling you his life history of despair and how this affects why they cannot pay, you need to be able to have compassion for the situation but offer a solution to get the debt paid, such as a payment plan or different options for payment.
- Preparing the pre-call plan: Before you ever make a collection call you need to research the account. Before you dial you need to know the invoice number, date, amount that is past due, how past due it is, the payment history, details of the order and if there were any disputed items. When the debtor asks you a question you need to answer immediately whenever possible. This shows the debtor that you are serious.
- Making opening statement: Your opening statement should be brief and to the point. You need to identify yourself and your company, state why you are calling and what you want. Here’s and example: Hi, this is Michelle from KTM Auto calling about your balance of $500.00 on invoice # 1234 dated 4/1/05. I am calling today to take your payment over the phone to clear this balance from your account. Would you like to pay with a check over the phone, debit or credit card? Then STOP! Let the debtor break the silence after your question and remember, always assume the debtor will pay.
- Asking questions with precision and making the transition to the payment arrangement: All your questions should be clear and to the point followed by silence after each question like the interaction below.
Debtor: I can’t pay, I don’t have any money
Collector: Are you working?
Debtor: Yes, but I just started a job and don’t get paid for two weeks.
Collector: What day will you get paid?
Debtor: Friday
Collector: Okay, then you can mail a money order for $25 on Saturday.
This example can go so many different ways depending on the debtor’s responses. You have to be positive and get them to agree to make a payment. Once you reiterate what is going to happen, send them a confirmation letter with a payment envelope. Then call them on Friday to remind them about mailing the payment. Your follow up call could be Hi this is Michelle from KTM Auto, calling to confirm you will be mailing a money order for $25 tomorrow, Saturday.
You cannot be too clear and follow up is the key to success. If you don’t follow up on any of the above actions, you are wasting your time and money. Take steps now to educate yourself on the collections process so you keep your cash flowing where it belongs — in your business.
Michelle Dunn, author of an award winning book has spent the last 18 years stepping into dangerous debt collection potholes. She shares her hard-won expertise on debt collection with the titles in her Collecting Money Series. She is the founder and president of Never Dunn Publishing, LLC and a 10 year old Credit & Collections Association with over 1075 members. She is a writer, teacher, and consultant that has a contagious passion for her work. Michelle started and ran M.A.D. Collection Agency for 8 years. In addition to writing and marketing her books, Michelle was a member of The American Collectors Association for 9 years and shares valuable credit & debt information with business owners on her blog at www.BizCreditPolicy.com. Michelle is originally from RI and now lives in NH. Visit www.michelledunn.com and www.credit-and-collections.com for more information.
What thoughts do you have about collecting money in your small business? Please leave a comment below.
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