By Dean Kaplan+
Here are some tips that can help you have the best in-house debt collectors possible. Especially when times are tough, we all want to maximize the income we generate from our customers. By taking proactive measures up front, the chances of developing slow or no-pay customers can be significantly reduced.
Make sure the goals of your debt collections department are in harmony with the goals of the company overall. If this harmony doesn’t exist, your department will be forever in trouble with the sales and management teams. Establishing clear credit policies for the company will make your job of collections a lot easier.
When a customer account is on credit hold, make certain there is no way for orders to bypass credit hold “accidentally” and be released to the customer. The sales team is motivated to sell product and move product, sometimes even when they know the customer is struggling. Don’t point any fingers, just look at the company’s systems and make it impossible for anything to slip past a credit hold.
Establish debt collection targets for all in-house debt collectors. Create targets that are realistic and measurable. Targets will help keep your collectors motivated, and will give you a good performance indicator. Targets are not popular, but they are necessary in any well-run collection department.
Make sure problem accounts get special attention. Prioritizing debt collections should be an everyday occurrence, but sometimes can be overlooked, especially during busy periods. Assign problem accounts to your best debt collectors. There’s a reason why they are so good. Utilize your best for problem accounts.
Expect to be paid in full from every customer. This mindset is critical to success, and every collector should have it for every collection call he or she makes. When you make that collection call, ask for everything. You can always back off from that, but you’ll be surprised how successful a collector will be because he or she expects to collect the entire amount.
Use credit holds as a business tool whenever necessary. Credit hold is an important part of a collector’s leverage. Customers want their product. When they realize they can’t have the product unless certain things happen, they are more likely to pay. Once your company releases the product, the payment leverage is gone.
Recognize that your customer views you as a vendor. Customers prioritize payments to some vendors over others. Ask to become one of their “A” vendors. Even if the customer denies doing this, everyone does. It never hurts to ask to be a payment priority.
Keep your commitments as well as your threats. An effective collector must have the authority to make commitments, not just issue threats on behalf of the company. When customers realize that a collector has authority to make commitments, this will help discussions of payment plans lead to actual payments.
Always assume a customer’s first payment offer is their worst offer, and respond accordingly. Keep the conversations going until you have gotten the commitment you need, or you determine that the offer is the best one they can offer today. Being a good listener and letting the customer feel cared about can help in getting the best offer sooner.
All collectors should be encouraged to set personal debt collection goals. An example of a personal goal might be to complete 20 collection calls before lunch. Goal setting has been shown to be a particularly important motivator for collectors.
When appropriate, offer a customer a cash discount to accelerate cash inflows. Obviously, if your competitor is offering a cash discount and you aren’t, they will likely get the business. Do your homework and be competitive in your pricing schemes. Be sure to get management support before ever offering a customer a cash discount.
Never accept a payment plan from a customer that you will have trouble explaining to top management.
By utilizing these hints, you can maximize their effectiveness. Today’s economy is leading to more work for debt collectors. Make sure your collectors have the tools and knowledge they need to keep the payments coming in.
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.