Menu

Commercial Collection Client Care Checklist

  • Written by Thomas E. Brenan, IV

brenan thomasYour company or client needs you to collect an overdue debt immediately, but wants you to get their money without souring or severing their relationship with the customer who owes. It’s delicate, but very doable. With the right actions, attitudes, policies and practices, a credit professional or collector can not only preserve, but actually strengthen the creditordebtor relationship.

Credit departments can teach customers to more reliably pay on time. Debt collectors or credit professionals can identify communication breakdowns between creditor and debtor that, once eliminated, decrease the likelihood of disputes and make way for on-time payments. Debtors impressed with the professionalism of a third-party collection agency may even become that agency’s client.

Drawing on my own experiences and conversations with my staff, IACC Past President Lee VandenHeuvel and IACC Board Members Robert Ingold and Robert Tharnish, I’ve assembled this best practices checklist.

Be Proactive

    

 1 Use Invoices to Inform
A properly constructed invoice can strengthen the customer relationship through clear communication. It should agree with the purchase order on the service or product provided, include details on service or product provided, and state the amount due, due date and how to make payment.

    

 2 Make “Collection Prevention” Part of Customer Service
Before the bill is due, someone – an employee from customer service, the in-house credit department, or a thirdparty hired to handle this important role – should call the customer with questions including: “Did you receive the invoice? Do you agree with it? Are you happy with the service or product?” Record the answers.

This call is an opportunity to remedy any problems and builds good will. And if the account should become delinquent, the customer’s affirmative answers can be used to dispel some of the most common missed payment excuses.

    

 3 Develop – or Encourage your Clients to Develop – a Strong Collection Policy
A written collection policy that outlines the specific, escalating steps – including the point where accounts are turned over to a third party – ensures consistency across accounts. Adherence allows the credit or collection professional to assure the debtor an action is strictly policy. A big bonus: It also teaches expectations, consequences, and the fact that meeting expectations or avoiding consequences improves the payment cycle.

    

 4 For Agencies - Customize Your Approach
Reputable agencies must understand creditors’ business strategies and needs. A reputable collection agency will customize the approach to first, third, or precollection services accordingly.

Consider asking clients how they want you to handle their collection. An agency can use a very soft approach with nice kid gloves, or come at it hard with boxing gloves and use investigative techniques. Once your client states the approach they prefer, don’t escalate the treatment without their approval. But if it becomes clear that this debtor is resistant to the level of pressure you’re applying, take that information to the client immediately.

Be Professional

    

 1 Prepare for the Interaction
• Research the customer’s payment patterns and recent changes in financial position. Know who can release a payment.

• Have all documents at hand both for your reference and to send to the debtor if necessary. If a debtor gives a reason for non-payment that your facts say is an excuse, clearly and calmly state the facts.

    

 2 Listen Carefully
What you hear, and what you deduce from what you hear, is at least as important as what you say. Ask questions and record the answers – they will help you achieve resolution, and know the right means of doing so.

Your goal should be to collect the payment in full while maintaining a strong customer relationship. You want to keep as many of your company’s or your client’s customers as possible, or you wouldn’t be reading this article. But not every debtor is a true customer worth keeping, and listening helps you deduce how to proceed. In my experience, there are four categories of debtors:

• Those willing and able to pay: The best customers. Make keeping them a top priority.

• Those willing to pay, but lacking resources or cash flow: Worth keeping as their situation may change.

• Those unwilling to pay and lacking resources or cash flow: Act early and often. There is a need to be more aggressive in your approach.

• Unwilling to pay despite having the ability: These are debtors, and perhaps perpetrators of fraud, not customers. If you’re a credit department employee, turn them over for aggressive collection immediately. If you’re a collection agent, contact an attorney.

“There is a point where you realize there is no relationship here to save and the primary focus is only to get this money,” said Robert Ingold, CEO of Commercial Collection Corp. “You don’t take more than one or two broken promises for payments.”

    

 3 Defy the Collections Stereotype and Follow the Golden Rule
You know the Golden Rule: Treat others as you would like others to treat you. In collections, this is important for two reasons:

• Many debtors owe multiple creditors. Kindness and respect makes them more likely to put your debt at the top of the pile.

• Talking down to debtors or harassing them can make a debtor defensive. From then on, anything said that is slightly aggressive will be perceived as a threat or harassment. Debtors know these words, and they will be quick to make a complaint to the creditor, Better Business Bureau or Attorney General, or contact their own attorney.

    

 4 Don’t Get Personal
Debtors should never feel personally attacked. The collector who can make calls feel like a business meeting rather than a trip to the principal’s office, will be more successful.

    

 5 Consider Your Audience and Be Culturally Aware
A credit or collection professional on a typical second-call conversation with an American debtor might firmly state, “You’ve already broken one promise for payment, and I can’t keep dealing with broken promises. I will get an attorney involved if your promise is broken again.” “That hard a line tends to backfire in Latin America and Europe,” said Robert Tharnish, a senior vice president at ABCAmega. “If you come on too strong, the result might be that the debtor immediately cuts off all communication with you. Yes, you can get a local attorney involved, but the agency (or company) makes less money if there is an attorney fee.”

    

 6 Be Empathetic and Provide Options
Empathy is important. “I always let debtors know we have the same goal – to get this account settled and get them back on good credit terms with my client,” said Ingold.

Lee VandenHeuvel, president of Ross, Stuart & Dawson, gives debtors a list of options. This is not recommended for a first call, but can be very effective when communications with the debtor are stalled and will encourage the debtor to make a decision one way or the other. Options are a good way to give the debtor a sense of control and persuade them to act. Your options might resemble VandenHeuvel’s standard list:

• Immediate payment of the full balance.

• Establishment of a reasonable payment plan, with the creditor or debt collector defining what is reasonable.

• A settlement amount that both parties agree to.

• A lawsuit seeking a judgment.

Advise the debtor they will likely find the last option the most costly.

Don’t Just Collect Debt – Solve Problems

    

 7 Be the Mediator
Suggest solutions that result in debt collection and a continuing relationship – including when a debtor says they need the very product or service provided by the creditor to make enough money to pay them. I’ve facilitated hybrid deals that include both a payment plan for the debt in question and a collect on delivery deal that allowed a debtor to immediately receive more goods or services from my client.

    

 8 Watch for Patterns and Make Suggestions
Keep an eye and ear out for patterns in the reasons a company’s debtors give for non-payment and share them with the right people. These glitches can be as simple as a pattern of sending invoices to the wrong address. But they can also get quite complex. Once, Tharnish’s company noticed a regional surge in the number of clients a customer was referring to collections. It turned out one salesman was telling his seasonal business customers they could have six months to pay – even though the paperwork called for the standard 30 days.

"The debtors were confused as to why they were being placed for collection when according to sales, they had two more months to pay!"

Fixing such issues helps preserve the relationship with current debtors, improves customer service, and keeps more customers out of collections.

This detailed advice really boils down to this: Whether an internal or third-party collector, you represent the creditor, and your actions are perceived as the creditor’s actions. Treat the debtor with respect. Handle the account without judgment. Suggest solutions to problems. Be creative. You’ll collect more money, preserve the creditor’s business relationships, and build a reputation that may result in more business or responsibility for yourself.

Thomas E. Brenan IV is president of the International Association of Commercial Collectors and President and CEO of Altus GTS Inc. based in Kenner, Louisiana.

The International Association of Commercial Collectors, Inc. (IACC), is an international trade association comprised of more than 350 commercial collection agencies, attorneys, law lists and vendors.