As what I have said in my previous columns, collecting past due accounts can be very taxing. More often than not, this can give the company “headache” which could cause serious cash flow problems. Below are some simple tips or you can call “artful ways” of collecting delinquent accounts.
Tip No. 1: Offer debtor a clear choice of actions. Most collectors collection strategy is the confrontational approach of: “if you will not pay/settle, we will file a case in court or we will endorse this for legal action. Why not instead of stating the obvious, let the debtor be given alternatives and let him choose his/her actions. Surely by using diplomacy and tact rather than threat, even though you are serious in pursuing legal action, it will surely not destroy any relationships and/or goodwill and will give a win-win result to both.
Tip No 2: Plan a “psychology war” collection effort, study your delinquent debtor. Some “psy war” collection tactic could include: (a) appeal to justice, fair play, sense of duty and cooperation; (b). Appeal to “pride” it may refer to vanity, good credit and reputation; never let your own pride to get in the way; (c) Instill fear by telling debtor that he could lose something (i.e. credit reputation) or second avoiding something (i.e. court case record).
Tip No. 3: Look and search for vulnerable area or “Achilles heel." Most debtors are vulnerable to something; it is now depending on your keen sense of information and networking skills that will give you an edge to get this kind of very helpful information.
Tip No. 4: Ask for third party assistance within the industry, family or community. In the Philippines we call this “padrino” system. This is much effective if one administering is closer to the “padrino” rather than the debtor to the “padrino”. If the reverse is the scenario, it will surely not be that effective.
Tip No. 5: Give the debtor a good reason to see things clearly and your way. This is not very easy, more often than not, creditors are the one “begging” to be paid rather than “demanding” to be paid. In collecting, it is always a strong opening if you could impress upon the debtor to see things your way, such as clearly stating to him the advantages or disadvantages of his actions or non-actions/ non-payment; also it will surely help if you will inform the debtor that by settling the account can positively contribute to either of the following: (a) build good credit reputation and as a successful businessman (b) improve credit standing in the business community (c) establishes a solid trust from supplier/ creditor (d) support self-esteem as a responsible/credible person.
Tip No. 6: When finally a legal action is decided upon to enforce collection, proceed as fast as you can. This is very important, because delinquent debtors generally do things inimical to creditor’s interest. If this is the chosen course of action, always remember that time is of the essence.
For credit & collection questions and inquiries, call or text 0917-7220521 or email him at elimtingco@cibi.net.ph