Debt collections happen in just about every operating business that I know. They are just part of doing business, unfortunately. With today’s tough economy, the end of the year issues, customers may be having more trouble than normal paying their debts. When invoices aren’t getting paid, it may be time to hire a collection agency to help get the debts paid. As in every industry there are good and bad ways to perform debt collections. I have found that a few of these ways will increase your success.
I think on of the most important things is to be prepared. Before you make the initial contact, make sure that you know everything you can about the customer. Make copies of all invoices, and any other information that will help you speak to what you are trying to collect. It makes it much more professional and personal for the customer.
Document everything! Let me say it again, DOCUMENT EVERYTHING! While talking to the customer about the debt, take notes about everything that was discussed, including the customers comments in case there is a future debt dispute. Over time, continue to add any relevant notes to the file to keep it up to date.
Don’t ever assume anything. While making that initial debt collection call, quickly make sure that the debt has in fact not been paid. Do not alienate the customer. Keep in mind that 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 of voice and your words. Wait and listen, give the customer the chance to say something and be sure to document the interaction.
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 is ultimately 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. If you get to that point contact us for help or some referrals to some great companies.