Psychological section: know thyself

DEBT-COLLECTION professionals estimate that at least 80% of people have terrible problems asking for money. Even if there’s no squabble. They just hate asking. They can’t stand the idea of walking up to someone and saying, “You owe me such and such. May I have a cheque please?”

Are you like that? Worse yet: is your credit manager like that? (Many are.)

Here’s a simple test: you’re in a queue and someone pushes in. Do you grumble under your breath and let him in? Or do you pipe up and say, “Hey! There’s a queue here. Go to the back.” Eighty percent or more would let the person push in. The same 80% are the ones who have trouble asking for money (from anyone — even their own brother).

If you’re honest and think you aren’t a natural debt collector, take account of the fact. Hire someone who finds it easy. This is precisely what many debt-collection agencies try to do themselves: pick people who are psychologically right for the job. There’s no point in them hiring someone to collect debts if it takes the person half an hour to calm down each time he phones someone.

And back to you: think of your health. If debt collection rattles you, you won’t be able to sleep at night. Is it worth it? Can you run a business that way?

You have to know how much debt-collection you can stand, then hand over the job when you reach your threshold.  Let the professionals go after them. The peace is wonderful.

 

*an extract from “The Debt Collector” published 1990

Collecting Your Debt Earlier and Easier

1. Be prepared to discuss past due balance with debtor/customer

Be prepared when you make the call or speak to the customer in person. Have the debtors file or screen in front of you. If you sound or appear unprepared you will give the customer the impression that the balance due is unimportant to your office and the debtor will not take you seriously.

2. Listen to the debtor/customer

When calling the customer about their past due balance, identify yourself, state the reason for your call and then say nothing allowing the silence to work its magic. The debtor will eventually speak and will continue to speak if you do not feel the need to fill the silence. You will get more information than you need. Use open ended questions. Do not interrupt the debtor, Long pauses are crucial. Repeat back what the debtor has shared with you to confirm your understanding.

3. Never take anything the debtor/customer says personally

When customers are unable to pay their balance they can become embarrassed, fearful and angry. The customer may feel desperate and may lash out, understand that these emotions and their comments have nothing to do with you.

4. Ask for a payment date

Ask the customer when they will be paying their overdue balance . If not immediately ask the customer to call you on the date they have given to confirm payment is being made and how.

5. Establish a payment schedule if necessary

If a customer has a legitimate financial or personal problem that is causing them to be delinquent tell them that you are sorry that they are experiencing difficulty and offer a payment schedule. Explain that despite the problem the balance still needs to be paid and you will be happy to set up a payment schedule.

6. Address disputes

If your customer claims they have not paid due to a dispute, problems with the service, not received the account etc., address their dispute immediately. Be sure to get back to them quickly with a resolution or response. Then ask for payment. If you can’t “fix”

their problem suggest the debtor pay the undisputed amount while you resolve the problem or you could offer a discount to collect the balance quickly and settle the matter then.

7. Stop service

Should the customer become evasive and not work with you to resolve their outstanding balance, Immediately stop supply.

Go back to step 4 and don’t get off the phone until you have all of the information your require. This may be the one and only opportunity to have contact directly with the debtor.

8. Realise when it’s time to place your claim with an agency. 

Know when you are beating your head against a brick wall.

Access the balance due versus how much time you have put into your attempts to collect the balance due. A reasonable time frame to place your claim with a collection agency is 90 to 120 days past due. Early placement generally provides greater recovery results.

You have good paying customers to focus on and dealing with your past due receivables takes you away from them and from maintaining the business cash-flow. The older an account becomes, the harder the debt becomes to collect and the less it’s worth.

9. Using a debt collection agency

Agencies offer a lot of advantages and incentives for your debtors to pay their bills that a company themselves can’t give. In addition to delinquent accounts, collection agencies can help an account from becoming delinquent. They can run credit reports to see if a customer may be getting into difficulty or has the ability to pay a long term payment plan.

They also have skip trace resources to find your debtors after they’ve moved

A debt collection agency can instill a sense of urgency with a debtor that the business has difficulty in doing. By direct contact the agency can handle the debtor with a personal and professional manner while all along putting the debtor in the position to act on to resolving their debt and being made aware of their options and the consequences they may face if the outstanding account is ignored.

It’s much harder to for a debtor to ignore an effective collection agent, than it was to throw away the bills. Many debtors fear that once the account has gone to a collection agency that it’s already affected their credit. The debtor gets their first collection agency letter and all of a sudden they’re eager to pay the debt to avoid their credit being affected in a negative manner or as many of the debtors think, to get the credit report cleared. Many agencies, believe if they report to the credit bureau which most good ones do, they don’t do so until their efforts have failed to resolve the account. But many debtors don’t realize that. Let’s keep it that way.

Your debt recovery agency will usually have the ability to report to the main credit bureaus. This may help in the future such as when that young adult who thought they were bullet proof when they were younger and irresponsible, have to now pay for the consequences of their past. Particularly when they want to get a mortgage, car or any type of credit extended to them, they may have to resolve your debt to do so. Some debts have been resolved 5yrs down the line in cases such as this. There is so much that a good agency can provide your business. A good tool is to get signed up with an agency ahead of time, and to forward the delinquent accounts in a timely manner as they come up.

DebtForce appreciates the faith it’s clients places in them when passing files over to us . We realise you have many agencies to choose from but have entrusted the task to us and we will do our utmost to maintain that confidence.