Tips For Suc­cess­ful Debt Collections

Tips For Suc­cess­ful Debt Col­lec­tions
By Dean Kaplan+

 

These tips can help you to be better prepared

Make a list of use­ful tac­tics you reg­u­larly for­get about

Debt col­lec­tions hap­pen in almost every oper­at­ing busi­ness. They are just part of the busi­ness land­scape. In today’s tough econ­omy, cus­tomers may be hav­ing more trou­ble than nor­mal pay­ing their debts. When invoices aren’t get­ting paid, it may be time to hire a com­mer­cial col­lec­tion agency to help get these debts paid. Com­mer­cial col­lec­tion agen­cies are experts in busi­ness to busi­ness debt col­lec­tion. As in every indus­try, there are good ways and bad ways to per­form debt col­lec­tions. Here are some ways to increase your success.

Be Pre­pared. Before you make the ini­tial con­tact with a delin­quent cus­tomer, make sure you know every­thing you can about the cus­tomer. Make copies of all invoices, con­tracts, and any other infor­ma­tion that will help you speak knowl­edge­ably, pro­fes­sion­ally and per­son­ally with the customer.

Doc­u­ment Every­thing. While talk­ing to the cus­tomer about the out­stand­ing debt, take care­ful notes about every­thing that was dis­cussed, includ­ing the customer’s com­ments in case there is a future debt dis­pute. If your com­pany has track­ing soft­ware, input every­thing into the sys­tem while the con­ver­sa­tion is fresh in your mind. Over time, con­tinue to add any addi­tional details to your file to keep it as up-to-date as possible.

Don’t Assume Any­thing. When mak­ing your ini­tial debt col­lec­tion call, quickly make sure that the debt has in fact not been paid. Don’t alien­ate the cus­tomer. Remem­ber there may be poten­tial future busi­ness with the cus­tomer. The debt in ques­tion could be a mis­take and not a col­lec­tion prob­lem at all. Be care­ful with your tone and your words at this point. Wait and lis­ten to what the cus­tomer has to say, and be sure to doc­u­ment the inter­ac­tion care­fully and accurately.

Be Pleas­ant and Con­trol Your­self. The tone you take with your voice can impact how suc­cess­ful the con­ver­sa­tion will be. If you start off the con­ver­sa­tion with a friendly, non-confrontational tone, the cus­tomer may respond more pos­i­tively. Once you have con­firmed that you are speak­ing to the cor­rect per­son about the unpaid invoice, ask if you can do any­thing to help. Ask if they need any addi­tional infor­ma­tion. If you act like you care or can under­stand the debtor’s side of the story, you may be able to pre­vent the per­son from becom­ing defen­sive. How­ever, remain detached from the sit­u­a­tion. Your job in debt col­lec­tions ulti­mately is to col­lect the debt in full as soon as possible.

Avoid Con­fronta­tion and Manip­u­la­tion. Attempt to find out if the debtor’s excuse for not pay­ing is legit­i­mate. For exam­ple, if the per­son blames the non-payment on some­one else, con­firm this is true or false by con­tact­ing the other per­son. Lis­ten care­fully to what the per­son is telling you, and get a sense of whether the per­son is being hon­est with you. Often, your gut feel­ing will be right on.

Put a Stop to Anger or Harass­ment. Always try to stay calm even if the debtor becomes abu­sive dur­ing the con­tact. If this hap­pens, you might sug­gest call­ing back later. No mat­ter what, always lis­ten care­fully to what the cus­tomer tells you and try to keep the dia­logue con­struc­tive as much as you can. It’s impor­tant to let the debtor feel he is mak­ing progress.

Give Options. If a cus­tomer is hav­ing trou­ble pay­ing off debt, it might be pos­si­ble for him to make pay­ments over time. Try to work out a plan that will work for both the cus­tomer and your client. The goal is to get the cus­tomer to pay the entire debt as quickly as pos­si­ble. Lis­ten care­fully and offer options until some­thing work­able is defined.

Recap the Terms. Once a pay­ment plan has been agreed to, ver­bally sum­ma­rize the plan for the debtor. This sum­mary should include specifics of when the debtor will send each pay­ment, and what form of pay­ment will be used. Then doc­u­ment it in writ­ing via email, fax or let­ter. Ask the debtor to call or e-mail you once a pay­ment has been sent.

Keep Com­mu­ni­cat­ing. Even if the debtor can’t pay right away, it is always impor­tant to keep com­mu­ni­ca­tions going. He may be able to pay in the future, and by talk­ing to the debtor and really lis­ten­ing to what he has to say, you may be able to help him fig­ure out a way to start pay­ing sooner. While the older a debt becomes, the harder it is to col­lect, some­times cir­cum­stances change and pay­ment may become possible.

Debt col­lec­tions are com­mon, espe­cially in dif­fi­cult eco­nomic times. Using these col­lec­tion tech­niques should increase your odds of suc­cess. But, if all this effort doesn't result in get­ting paid, you may want to use the ser­vices of a rep­utable col­lec­tion agency.

The Kaplan Group is a bou­tique col­lec­tion agency spe­cial­iz­ing in large (over $10,000) debt col­lec­tions due from busi­nesses. Founded in 1991, the com­pany has a stel­lar rep­u­ta­tion (A+ rat­ing with the Bet­ter Busi­ness Bureau) and is rec­og­nized as one of the lead­ing col­lec­tion agen­cies for results on large and com­plex mat­ters.