How to improve collecting past due accounts

Collecting past due accounts can be very frustrating. More often that not, this can give the company so much headaches and can cause serious cash flow problems. The reality is that, a lot of companies have no skilled and experienced credit and collections group that can implement a no non-sense credit and collection policies to improve their collection and minimize delinquent accounts. This is the very reason, why a lot of these companies resort to engaging the services of third party collection agencies to collect for them.

In all of my talks, I always ask my participants two questions: (1) when do you consider a customer delinquent? and (2) what are your actions after it became delinquent? Unfortunately, most of the answers were so vague (and defensive) that it is obvious that they practically have no idea how to answer it and handle the situation. Most of the answers and strategies used are either the threat or bluff collection strategy. They threat or bluff collection strategy use words, such as “if you will not pay, we will sue you” or if you will not pay we will file legal cases against you” – but actually not being enforced. Personally, I believe that this strategy is the weakest strategy of them all, as this is hardly effective nowadays. Most delinquent debtors know already that this is “just lip service”. That is why, I always advice my client, not to write, say or worse make it a procedure anything that they are not even sure they will be doing.

For instance, if you say, you will “refer it to legal”, make sure, you have a legal unit (whether in-house or outsourced) to handle the account, or if you say, “you will endorse the said past due account to “CIBI Infonet” (CIBI Information’s internet based database of past due accounts, that is being accessed by banks, commercial, lending, financing and consumer companies) for watch list- you must refer them to us. This is what we call effective escalation technique. And the key here is do whatever you tell them what you would do.

Another, effective collection strategy that you could employ is the use of telephone follow-up. Tele-collection, done by well trained staff is always considered to be the most practical strategy in collecting past due accounts. In as much that collection by mail is regarded as the most basic and necessary collection tool, collection by telephone is always regarded as the more efficient tool because of it being cost effective (no paper, mail expense) and faster. Furthermore, if the collector has a business like and/or “convincing voice”, this will definitely be a plus factor. The voice and overall sound projection makes the difference between a successful and a failed collection effort. Here are some few tips that you can apply in doing collection over the phone: First, keep the telephone mouthpiece at a proper distance; second, speak clearly; third, control your voice volume; fourth, use right tone of voice and control rate of speech.

However, sounding good over the phone is not enough, the “telecollector” must have fair to good credit knowledge. It would certainly help if he or she has a modest background on applicable laws on credit and collection terms. Debtors can easily determine if the one they are talking with are professional or a dummy that they can “fool around”.

For more credit & collection (C&C) questions, comments and rejoinders you want to share or inquire, text or call 0917-7220521 or at [email protected]