Building Blocks for Business Debt Collection Success

Building Blocks for Debt Collection Success

The average collector knows perhaps a dozen collection techniques. The professional col­lector, however, has mastered many high-powered collection techniques and uses them all. Knowledge is not enough in itself. You have to harness and direct that knowledge. It must be backed by a plan and affirmative action to achieve a specific purpose. The progressive structure of accounts receivable management can be likened to building blocks. Let us examine collection strategy as a step-by-step process and analyze appropriate techniques for each step.

1. Establish communication and develop interest. You must understand that your collection call, like any other call, is an interruption to the debtor, whose attention is else­where. When a debtor picks up the telephone, that person is not interested in you or your company. The debtor is certainly not interested in discussing the indebted­ness. Therefore, you must set the stage for effective communication by making a sale before the sale. The mind is like a parachute—it works only when it is open. You must earn the right to make your presentation by neutralizing debtors’ preoccupa­tion with other matters and capturing their interest. You can succeed only if you have their undivided attention.

2. Listen empathetically. There is a big difference between sympathy and empathy. A sympathetic listener feels sorry for the other person. Listening with empathy, how­ever, means you relate to the other person, understanding how that person feels in the circumstances under discussion. An empathetic person can develop relationships with debtors under trying circumstances—a necessary skill in collections. Collec­tors must learn to listen and let debtors express opinions, remembering all the while that debtors can quickly direct conversations off the track. Level and tone of voice are very important. Your voice should be somewhat subdued and not unduly aggressive. It is okay to show a certain self-confidence, but do not have any precon­ceived notions about the debtor’s sense of honesty or get so involved in conversa­tions that you take what debtors say personally.

This book includes many empathy-building statements that acknowledge the debtor’s point of view and provide a framework for better communication. Many collectors attend seminars, read books, and use other training forums to further their knowledge, but few have ever sought training to improve their listening skills. Yet listening is just as important to the collection process as selling. The ability to listen and decipher a debtor’s excuses and frame a response is an absolute prerequi­site to superachievement in collections.

3. Use sales strategies. Unfortunately, most collectors lack sales skills, relying instead on conventional collection protocol. But debtor mentality has undergone a tidal wave of change. Today’s sophisticated debtor will not respond to antiquated terminology. The days when hard-line tactics were effective are today interwoven into a mixture of creative persuasion techniques. You need new collection strategies based on prin­ciples of effective sales. The secret is to be creative in terms of what you can do to persuade debtors to satisfy their obligations. To convince clients to pay, you must present your service or product in a manner that will result in monetary fulfillment of the obligation. If you can present your charges in light of the importance of your service or product to their business or personal happiness, you can persuade them to pay your bills before the others.

4. Negotiate objections. Few in the collection profession realize that their job description revolves around negotiation. Collection involves listening, problem solving, and persuasion—all components of effective negotiation. An unwillingness or inability on the part of collectors to negotiate is the reason a lot of money goes uncollected. Similarly, few collectors have the ability to distinguish between a “condition” (e.g., bankruptcy, loss of job, or other economic factors that make it impossible for the debtor to come to terms with the obligation) and an “objection” (an invalid or insufficient reason for nonpayment). Yet a collector who recognizes a debtor objec­tion for what it is can overcome that objection and negotiate a settlement. A mas­tery of negotiation skills and an ability to distinguish between conditions and objections are essential.

5. Follow up. Follow-up is one of the most important, yet most neglected, phases in the debt collection cycle. A debtor’s word that he or she will pay is not enough (especially after all of your customers defaulted on their original obligation). The collector must make sure the debtor follows through on that commitment. By doing so, the collector is making a sale after the sale. Too many collectors believe statements made by debtors with the sole purpose of rushing the collectors off the telephone. A debtor’s statement that he or she is going to mail a check or adhere to other agree­ments does not necessarily translate into funds on deposit in your account. It is crit­ical to confirm the debtor’s commitment and follow up the collection call if you are to keep broken promises to a minimum.

As the collector maneuvers the debtor, each preceding step must be completed and confirmed. Do not copy someone else’s style. You are unique. Identify your own style. Develop your own message. You have a song to sing. You are on stage. You are an actor who directs, writes, and produces your own performance. Remember that every collection call is a performance, so give it your Academy Award best.