News: General News

Simple Steps for More Effective Collections

Tuesday, October 30, 2018  
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Collecting on past-due accounts can be a challenging and sometimes unpleasant job. Often customers hearing from you about their bills are receiving similar calls from other vendors. You need to convince the late payor to prioritize you above other vendors while maintaining a positive, professional relationship. 


Fortunately, a few simple actions can improve your collection odds. Brian Armstrong, vice president of collections with Commercial Collectors Inc., suggests these three quick and easy tips for better collections. 


Change the Question

When seeking payment, most people will ask, “How much can you afford right now?” This question often results in the lowest possible amount the late payor thinks might be acceptable to end the call. On a $1,000 bill, offering $100 may be typical, so that’s the initial response. Instead, reframe the question as, “How much are you short of the full payment?” 


This reversal changes the way the late payor thinks about the debt and will often result in a higher payment. If the response is $500 on the $1,000, you’ve just increased your results by $400 simply by changing the way you asked the question.


Get the Customer to Take Action on Every Call

Every collection call should result in some progress toward achieving payment. Even if you are unable to get payment in full, you can gather information and educate the customer, advancing the process. 


If the customer says payment isn’t possible today, ask what action is going to make funds available and when. Then ask, “If I follow up on (day customer mentioned), we can get $xxxx, correct?”. Getting the pre-commitment increases your odds of them following through. 


If the person responsible for payment is unavailable, instead of leaving another message/voicemail, ask who else can help resolve the matter. You’d be surprised how often that “someone else” actually exists.


If you’re speaking with someone who isn’t a company decision maker (receptionist, store employee), leave your contact information and then ask some questions to get information you may not know about the company that may be helpful – other locations, how long the company has been in business, etc. This may give you some new insight into your customer’s current situation. Some people really like to talk and will give you a lot of information.  


This approach helps the customer remember you and recognize that you are different than others vendors who are calling. You can still be professional and friendly, but be different from the “also rans.” This helps your chances of moving up the list, resulting in payment sooner than the others.



Establish Deadlines

Deadlines and urgency work, and there’s always something happening that can be used to set a deadline. Some examples are: “We just finished the third quarter and are going through the aging to clean that up” or, “I have a meeting with my finance management team on Friday to discuss accounts, and I know this one will come up. I’m calling to get that current so I can report good news.” 


Most customers want to pay the bill and avoid future collection calls. Deadlines make the situation seem more important and provide a perceived incentive to pay the bill, whether the deadline is real or self-imposed.


Join NACM North Central on Nov. 8 in Fargo or Dec. 4 in Minneapolis for our Effective Collection Planning workshop. Brian Armstrong and Larry Barthel from Commercial Collectors Inc. will show you how to develop and execute an effective collection plan. You’ll learn how to prepare for a successful call, handle disputes and stall tactics, deal with difficult customers and make difficult decisions about delinquent accounts. Register for the Fargo or Minneapolis event today.