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Ten Steps to More Successful Debt Collection
© 2001 Michael C. Dennis
 

Some credit professionals would argue that there are no secrets to commercial debt collection; that what is required is tenacity and hard work --- and they would be partially correct. Hard work will go a long way towards collecting from many delinquent customers, but hard work alone will never solve every collection problem. Listed below are a dozen ways that collectors can become more effective debt collectors quickly:

1. Make more collection calls. Organize calls by time zone. Prioritize calls in order to address larger problems sooner rather than later.
2. At the same time, place a premium on the quality of calls rather than strictly on the quantity of calls completed.
3. Be more assertive; expect more from each collection call placed.
4. Keep the initiative by making calls rather than leaving voice mail messages and hoping for a return call. Leave a message only as a last resort.
5. If you must leave a message, avoid phrases such as "please return this call at your earliest convenience" or "call as soon as possible." Ask for an immediate return call. If there is an order pending, emphasize this fact in your message.
6. Always request and expect payment in full of the past due balance. Don't rush through a collection call. Instead, take the time to confirm payment commitments.
7. Make certain that the sales department [or sales order entry if applicable] is reviewing purchase orders so that orders with unacceptable terms are rejected.
8. Be sure your credit application contains a personal guarantee. Use the guarantee as leverage with "reluctant" debtors. Make sure your invoices, statements and dunning notices list your terms of sale and discount policies.
9. If your company offers cash discounts but certain customers are not taking the discount, contact those customers' controller to "encourage" them to pay soon enough to earn the cash discount.
10. Be sure the telephone is your department's primary collection tool. Letters, faxes, and dunning notices are one-way communication --- only phone calls and personal visits involve two-way communication between the creditor and the debtor. It is easy for a debtor to ignore a letter, but far more difficult to avoid answering questions face-to-face or on the telephone.