Collections Insider

In this article, I’ve listed eight highly effective techniques that successful businesses use to collect past due receivables before placing them with a collection agency.

1. Be prepared to discuss past due balance with debtor/customer

Be prepared when you make the call or speak to the debtor/customer in person. Have the debtors file or screen in front of you. If you sound or appear unprepared you will give the debtor/customer the impression that the balance due is unimportant to your office and the debtor will not take you seriously.

2. Listen to the debtor/customer

When calling the debtor/customer about their past due balance, identify yourself, state the reason for your call and then be quiet. Allow the silence to work its magic. The debtor will eventually speak and will continue to speak if you do not feel the need to fill the silence. You will get more information than you need. Use open ended questions. Do not interrupt the debtor, let them spill the beans. Long pauses are crucial. Repeat back what the debtor has shared with you to confirm your understanding.

3. Never take anything the debtor/customer says personally

When debtors/customers are unable to pay their balance they can become embarrassed, fearful and angry. Understand that these emotions and their comments have nothing to do with you. The debtor/customer may feel desperate and may lash out.

4. Ask for a payment date

Ask the debtor/customer when he/she will be paying their balance due. Tell the debtor/customer to call you on that date with their check number and ask how it was mailed, i.e. first class, priority or overnight. Keep a calendar of the promises to pay. Follow up with those debtors/customers that do not contact you to make sure payment has been mailed.

5. Set up a payment schedule if necessary

If a debtor/customer has a legitimate financial or family problem that is causing them to be delinquent tell them that you are sorry that they are experiencing difficulty and offer a payment schedule. However, do not allow the problem to become yours. Explain that despite the problem the balance still needs to be paid and you will be happy to set up a payment schedule.

6. Address disputes

If your debtor/customer claims they have not paid due to a dispute with the billing, problems with the service, insurance problems, etc., address their dispute immediately. Be sure to get back to them quickly with a resolution or response. Then ask for payment. If you can’t “fix” their problem you could offer a discount to collect the balance quickly and avoid losing the client. If the dispute is ridiculous and appears to be a stall tactic ask if there may be another problem preventing them from paying. If it’s financial then offer a payment plan.

7. Stop service

If your debtor/customer is not working with you to resolve their outstanding balance do not continue to do business with them unless you have a contract that states otherwise or if the law requires that you continue to assist them i.e medical patients.

8. Know when it’s time to place your claim with an agency

Know when you are beating your head against a brick wall. Access the balance due versus how much time you have put into your attempts to collect the balance due. A reasonable time frame to place your claim with a collection agency is 90 to 120 days past due. Early placement could provide greater recovery results.

You have good paying customers to focus on and dealing with your past due receivables takes you away from them and from making money.

About the author: Jan Conte is the President of Your Collection Solution, LLC, a debt collection agency out of Newtown, Pennsylvania. She has over twenty years experience in the debt collection industry. You can find more of her articles at yourcollectionsolution.com/blog/.

Recently I read “Be a Sales Superstar”, written by Brian Tracy. It occurred to me about half way into this book that the Tracy’s 21 Great Ways Sell More, Faster, Easier in Tough Markets could apply to any and all professions, not just that of a “Salesperson”.

Aren’t we all sales people in one way or another? I run a collection agency. In order for me to get debtors to pay I have to sell them on the idea of paying my client versus another creditor. I have to make them feel that paying my client first is the right thing to do.

Tracy’s 21 Great Ways include committing to your job, believing and feeling you are the best at what you do, building long term relationships, looking the part, behaving professionally always and handling responsibility and objections well. These are skills we all need to do our jobs well and to make more money doing them.

This book is a fast read and I guarantee a worthy one as well.

About the author: Jan Conte is the President of Your Collection Solution, LLC, a debt collection agency out of Newtown, Pennsylvania. She has over twenty years experience in the debt collection industry. You can find more of her articles at yourcollectionsolution.com/blog/.