It can be a challenge to keep your aging clean. Credit and collection professionals have many responsibilities beyond collecting aged accounts. New customer set up, order releases, cash posting, and reconciliation are just a few of the tasks that can keep credit staff from maximizing their collection activity. Another challenge that prevents customer contact is that collection staff often have call reluctance and would rather do all those other activities as opposed to picking up the phone to collect money.

Time is critical when it comes to reducing delinquency

If you are going to reduce delinquency, its critical that you maximize the impact of your collectors’ time. You must recognize when they are spending too much effort chasing accounts with low odds of recovery. Investing time collecting accounts that are on the cusp of paying you is best. Your efforts produce the greatest results when you are accelerating slow paying accounts and making decisions to push serious collection problems off your aging.

Warning Signs of Time-Consuming Accounts Receivable

• ACCOUNT IS 90 DAYS PAST DUE WITH NO PAYMENTS AND NO RECENT ORDERS
  This is often a sure sign your customer has already moved on to another supplier.
• CUSTOMER IS TALKING ABOUT BANKRUPTCY OR GOING OUT OF BUSINESS
  This is the last thing you want to hear and time is of the essence to get the account paid before they liquidate.
• CUSTOMER IS TELLING YOU THAT CONSULTANTS ARE COMING IN TO HELP RUN THE COMPANY.
  You want the opposite of what the consultants want. You want your cash now and the consultants are often paid to slow the cash payments to vendors even more.
• DISCUSSIONS OF OBTAINING FINANCING, WITH NO SET DATE FOR FUNDING AND NO FOLLOW THROUGH.
  A few companies are fortunate enough to get financing and pay vendors; however, most lenders aren’t willing to extend financing to your customer. Your customer is already behind with vendors and to a bank, that’s just too big a risk.
• DISPUTING THE ENTIRE BALANCE, SAYING NO INTENTION OF PAYING AND THERE IS NO VALIDITY TO THEIR DISPUTE.
  Why invest time with someone who is not being rational?
• NON-RESPONSIVENESS: CUSTOMER HAS NOT RETURNED YOUR TELEPHONE CALLS.
  It’s easy to overlook these customers; however, don’t do it. A silent customer is really speaking volumes through their lack of communication and their lack of payment.
• BROKEN PROMISE/BROKEN PAYMENT PLAN
  You can only give a customer so many chances and maintain credibility. If the customer follows through, it is a great success. If they break their promises, they start consuming too much of your time.
• REQUEST FOR A DISCOUNT IN ORDER TO SETTLE
  We are seeing aggressive (low) offers from debt negotiators. Remember, they are just that, negotiators. If you get a low-ball offer from a debt settlement company, don’t take the bait. We routinely generate much more favorable solutions and return more net dollars to your bottom line.
• CUSTOMER HAS A HISTORY OF SLOW PAY AND IT IS GETTING WORSE
  You don’t want to be the last vendor holding the bag. This requires immediate action to reverse the trend.
• 1ST ORDER DEFAULT
  Any time you have an initial order that goes beyond terms, time is of the essence. Chances of recovery are strongest while the trail is fresh.
• NSF CHECK
  Customers that bounce checks are great consumers of your time and add incremental costs to your business.

Reducing Delinquency and Managing Problem Accounts

The key to reducing delinquency is having the time and ability to influence your slow paying customers to pay more quickly. That’s the best use of your staff’s time. Avoid getting caught in the trap of handling all the extremely challenging situations that come your way. For every one collection challenge you try to tackle on your own, you miss the opportunity to push five routine customers to pay now.

DSO reduction begins with sound internal processes and an action plan for managing exceptions. What value can a collection partner bring to exception management that your staff can’t?

We employ the resources to surround the problematic accounts on your aging so that you and your staff can focus on the ordinary AR issues that are ever-present.

In the accounts receivable world, an older account has smaller odds of being paid. It can be very expensive to hold onto accounts that you will not be able to collect using the methods at your company. When concentrating on other aspects of your business proves to be a better use of company time and resources, using an outside collection agency (OCA) to collect unpaid debt is a great option that can actually help your business grow.

Achieve recovery on your past due accounts quickly, while maintaining a positive relationship with your customers

Collection representatives at certified commercial collection agencies are trained on current collection techniques, technology and compliance issues. They also generally have an understanding of business and collections laws and regulations. Therefore, using an outside collection agency will save time and likely provide much better results than you could achieve on your own.

Did You Know?

According to the Commercial Collection Agencies of America (CCA of A), In as little as three months, the probability of collecting a delinquent account drops to 68.9%. After six months, collectability drops to 51.3% and after one year, the probability of ever collecting delinquent accounts drops to 21.4%. If your business is sitting on unpaid invoices without actively pursuing them, it is worth it to give them to a professional commercial collection agency to handle. Invoices are not going to get collected if you keep them, and the percentage you will pay the agency will be well worth it.

THE CCA OF A SUGGESTS THAT CHASING PAST DUE RECEIVABLES IS NOT WHY YOU HIRED YOUR CREDIT STAFF:

• Delinquent accounts take time away from management and credit personnel that could better be used performing more profitable activities.
• In-house collections statistics reveal that at three months past due, almost 27% of delinquent accounts will never be collected. At six months past due, over 44% of delinquent accounts will go uncollected
• Past due receivables demand immediate and effective action when the cost of your own personnel’s efforts does not justify further action or a customer demonstrates bad faith and loses credibility
• Look for the Seal of a CERTIFIED member to be sure of receiving the highest level of professional collection services, competitive results and ethical dealings with you and your customers

Once you have placed your claim with an OCA, please do not engage in discussions or negotiations with the customer. If the customer contacts you, simply refer them back to your agency. Customers sometimes try to circumvent professional collectors in order to confuse or delay payments. Don’t be taken in by this tactic. When a claim has been placed with a collection agency, all discussions and negotiations should go directly through them.

EFFECTIVE COMMUNICATION AND TRUSTING YOUR COLLECTION AGENCY FOR OPTIMAL RESULTS

In order to keep the collection process moving smoothly, be sure to respond immediately to the collector’s requests for further information, should they have any. The longer you delay, the longer it will take to collect your account. Or, it may put your collection agency in the position of not being able to collect your account at all.

If you have done your due diligence in selecting an OCA, don’t be impatient, allow proper time for the agency to work the accounts you have placed. It is in the best interest of the collection agency to resolve the accounts as quickly as possible. Micromanaging can take collector’s time away for properly working the account.

An agency’s main goal is to collect on a claim as quickly as possible. Typically when a claim is set,  a letter will be sent to the customer indicating that their account has been sent to collections, and the letter will indicate the total amount due with instruction to remit payment immediately. In general, you can expect to be contacted within two weeks to provide an update on the account, and online account access may also be available if your chosen OCA offers that capability. Full payment, payment commitments or a payment schedule should be arranged within 30 – 45 days. However, if the agency is unable to collect on the account within the 30 – 45 day time frame, the account may be sent to an attorney with your approval.

ATTORNEY-AMICABLE HANDLING

The first contact the attorney will make with the customer is known as attorney-amicable handling.  This is another attempt made on the claim to collect without resorting to legal action. Should this not result in payment, the agency may ask for your permission to elevate the claim to a lawsuit. It normally takes 60 days to serve the customer with the compliant, and then the customer will then have 20 to 45 days to respond. If the customer does not respond, however, the attorney will file a motion for default judgment, which will take another 30-60 days to obtain from the court. If the customer does answer, the next course of action and time-frame will be determined by his position. Once a final judgment has been made, the customer will have 30 days to pay. If the customer still fails to make payment, the attorney will issue an execution to the sheriff, who has 90 days to contact the debtor and arrange for payment. If this doesn’t result in payment, further legal proceedings will be required.

Positive Cash Flow is Critical

For both large and small businesses having positive cash flow is critical for success. Just a handful of delinquent accounts can negatively impact the financial status of your company. So if you do not have the time or resources to perform collection activities in-house, it is wise to engage an outside collection agency. It is always in the best interest of an OCA to collect as much money as possible as quickly as possible. After all, if they don’t collect, they don’t get paid

How Credit and Billing Best Practices Can Prevent Delinquent Accounts

Stuff happens. Product deliveries get delayed, companies move, employees retire, invoices have errors, and so on. Many times, this is the ‘stuff’ that results in past-due accounts receivable.

We queried our collections system for the most frequently occurring reasons for nonpayment over a 24-month period, and we found that our clients could have prevented a great number of these issues by putting some proactive, consistent measures in place.

Here are the Top 10 Reasons:

1. THE INVOICE WAS LOST OR NEVER RECEIVED
Our collection representatives heard this excuse from our clients’ customers more than 26,000 times in two years. Whoa! So, what can you do to prevent this from happening with your customers?

One of the easiest ways to ensure your invoices make it to the correct party is to check your records on a regular basis, including your ERP and/or CRM databases, credit applications, and purchase orders. Work with your sales and billing teams to ensure a process is in place to review and update these files at least once a year, ideally every six months.

2. YOUR CUSTOMER CLAIMS THEY ALREADY PAID
This claim is nearly as common as the one above. Our collection reps heard our clients’ customers tell them they had already paid a presumed past-due invoice more than 23,000 times in 24 months. In some cases, it was indeed a case of the check and payment demand crossing in the mail, but more often than not, the issue was related to our clients’ cash application processes.

Just as it’s essential to check your records to make sure invoices are sent to the proper contact, it’s also necessary to review how you are applying payments, internally. Procedures should be in place to periodically review your company’s cash application process to ensure nothing is broken, as well as to update and manage un-applied payments in your system regularly.

3. AP NEEDS ADDITIONAL DOCUMENTATION BEFORE THEY'LL PAY
Documentation occur a lot (over 16,000 times in two years). It’s no surprise that the person paying the invoice is often not the person who placed the order with your company. Accounts payable departments generally have procedures where a certain amount of backup documentation is required before they’ll pay an invoice.

Examples of these documents can include a copy of the sales contract or PO, proof of order, or delivery confirmation.

4. AP NEEDS INFORMATION ABOUT THE PRODUCT OR SERVICE
In our collections system, this reason code is a bit of a ‘catch all’. Essentially, what it means, is that your customer’s accounts payable folks have questions they need clarified before they’ll pay the bill. These questions might be related to the specific product or service or about invoice coding that they’re not familiar with. Anything that is unclear to the person responsible for paying the invoice could result in a ‘more info needed’ delay.

Work with your billing team to ensure anyone with an appropriate level of background information can make sense of your company invoices. Test this out by having someone outside of credit, collections, sales, billing, or AP look over one of your invoices to see if they understand it. Take their feedback into consideration to determine if any changes are necessary.

5. YOUR CUSTOMER HAS A DISPUTE THAT NEEDS TO BE RESOLVED
Invoice disputes come in many varieties, but they’re usually attributed to one of three things:

1) The product or service itself

2) The price charged

3) The payment terms

This could be related to a terms discrepancy, an issue with the product quality or service delivery, or an incorrect rate or invoice charge.

It can be challenging to see these issues coming – especially if the billing department is not aware of special pricing offers or exceptions that may have been put into effect by someone on the sales or service team. Regular communication between your credit, sales, service, and billing teams is key to preventing these types of disputes.

6. THE CUSTOMER CAN'T (OR WON'T) PAY, MAKES A SETTLEMENT OFFER OR REQUESTS A PAYMENT PLAN

We get it. Sometimes, the customer just doesn’t want to pay. Other times, they can’t. For whatever reason, company funds may be tied up, or irregular constraints have been put on the AP department. In our 93 years in business at ABC-Amega, we’ve heard all the excuses!

Unfortunately, we often find these delays to be nothing more than stalling tactics to extend terms. There’s not much you can do to prevent or predict this from happening – that is, unless specific customers have a habit of employing such schemes. You’ll want to have regular service calls with these customers to ensure their expectations are being met. These meetings should help prevent the ‘won’t pay’ and settlement offer occurrences.

To avert customers’ temptation to pay late or request payment plans, offer a discount for pre-payment – or a surcharge for late payment and payment plans.

7. THERE WAS AN ELECTRONIC BILLING ISSUE
When we hear this excuse, the customer often tells us that they couldn’t submit payment through the vendor’s payment portal as they were supposed to. Specific issues related to this include expired log-in credentials (without an easy way for them to reset), unanswered support tickets, updated banking information, or a general issue with the vendor’s EDI software.

To prevent these types of billing issues, make sure you have a process in place for customers to self-serve and reset their credentials in your payment portal. To take it a step further, ensure that portal log-in access is discussed when you review the company’s credit application, purchase orders, ERP and CRM contact information. We suggest doing this no less than once per year or, ideally, once every six months. You should also schedule regular (i.e. quarterly) testing of your EDI system.

8. YOUR CUSTOMER REQUESTED A BILLING ADJUSTMENT OR REVERSAL

There could be a several reasons why customers would request a change to an invoice. The most common reasons we hear are that there was an error with the price charged (i.e. wrong per item cost or incorrect total cost), an issue with the quality of the order, or a portion of the order was damaged or returned and requires reimbursement.

9. THE WRONG CUSTOMER WAS BILLED

Your customer says they never received your invoice. They’re likely telling the truth in many cases, because you missed updating necessary contact records. We come across this issue most often when companies move their office location. Given the state of the work right now, it’s safe to assume the rate of this occurring will continue to increase. Many companies have moved to work-from-home or hybrid models. Others have closed or merged office locations, so paying attention to your customers’ email signatures and other outbound communication is important to ensure you don’t miss timely mailing information updates.

At Cadex, we often see this issue occur with clients who have multiple customers in a single office building (e.g. telecom and energy providers). So the bill will be sent to the correct service address, but the tenant they billed is no longer occupying the suite they mailed the invoice to.

10. THE SERVICE OR PRODUCT THEY RECEIVED WAS UNSATISFACTORY

Finally, the tenth most frequently occurring dispute we encounter is directly related to a product or service issue.

Proactive Solutions for Preventing Payment Delays

In credit, you don’t have any control over the quality of the products or services your company sells, but you can control the frequency of your communication with your sales and service team. Therefore, it’s best to work with these departments and put measures in place to ensure that invoices are adjusted accordingly when a complaint is verified.

There are at least a dozen more reasons that we’ve recorded to understand why customers dispute or delay payment. Some of these include missing or invalid purchase orders, company name/address changes are needed on the document before they’ll pay (a stalling tactic for some, a company policy for others), the wrong tax rate was charged, or the company recently filed for bankruptcy.

As a vendor, some of these delays could be controlled or prevented by putting a few proactive measures in place. However, we realize that customers and processes are rarely perfect, and a percentage of your accounts receivable will always be past due. As a collections agency and service provider, we can customize our collections system with your company’s unique dispute reasons. We’ll track and report on this data to help you identify the root cause of payment delays, ultimately helping you prevent this ‘stuff’ from happening in the future.

For most people, picking up the phone to call a customer and ask them for money isn’t the highlight of their day. In fact, in most overworked and understaffed credit departments, collection calls are placed dead last or fall off the “to-do list” altogether.

Why? Reasons vary. But basically, the truth is that making debt collection calls takes most people out of their comfort zone. They don’t feel confident with the process, so they fear embarrassment or failure. If collections is part of your job responsibilities, here’s some good news. You can succeed in collecting debt effectively with these six debt collection techniques from our certified professional.

#1 ALWAYS BE PREPARED – GENERALLY AND SPECIFICALLY

NASCAR great Bobby Unser is credited as saying, “Success is where preparation and opportunity meet.” We couldn’t agree more. You can never be over-prepared when it comes to tackling a collection call.

BE READY TO HANDLE EXCUSES

Before making your next collection call, take time to compile a list of common customer excuses, matching them with effective rebuttals.

Pre-creating a list of common customer excuses with effective rebuttals is a successful debt collection technique to ensure you get the best results.

You can write them down on file cards or include them in your computer scripting. Group them by category and keep them handy. Exchange debt collection techniques and ideas with others in your department. Then, when the customer tries to end the call by offering an excuse, you can take control by countering with a well-thought-out reply and returning to the purpose of your call — collecting the debt.

HERE ARE SOME GOOD DEBT COLLECTION SCRIPT EXAMPLES FROM OUR COLLECTION EXPERTS TO GET YOU STARTED:

CUSTOMER: The check is in the mail.
COLLECTOR: Great! May I have the check number, amount, and date it was mailed so I can ensure it is posted correctly?

CUSTOMER: I have a cash flow problem right now.
COLLECTOR: I understand that times are difficult. Can I set you up on a payment plan, or can you make at least a partial payment today?

CUSTOMER: I don’t have a copy of the invoice.
COLLECTOR: I’ll send the invoice over right now. Will you be mailing the check today or can you pay by phone?

If you want to see more examples, check out this article: 3 Real-World Examples of Effective Debt Collection Call Scripts

ARM YOURSELF WITH THE FACTS

Being a good debt collector means knowing the specifics of the debt you’re calling about before picking the phone up. Having the facts in front of you keeps you in control. You don’t want the conversation to get derailed by a question you can’t answer. Many customers know how to use this to their advantage. Suddenly they can’t discuss payment on their account without details you don’t have and they don’t “have in front of them” either. So, the call is over.

If you hear yourself saying, “I’ll have to get back to you on that,” you’ve just given the customer an extension without a commitment to pay ” and you’ll have to start from square one with him when you call back.

At a minimum, be sure to have the following in front of you before you make any collection call:

• Exact amount owed
• Terms of sale
• Products/services purchased
• Payment due date
• Other open invoices, even those not yet past due

KNOW WHO YOU’RE CALLING

It’s also helpful to brief yourself on the customer’s payment record with your company, as well as any other payment history you may have available to you. Do they usually pay on time? Are payments getting slower and slower? Is past-due payment uncharacteristic of this customer?

#2 THINK POSITIVELY

Your mental state has a strong impact both on how you handle the past due customer and how they respond to you. Treat each call as if it was your first call of the day. Put a smile on your face. If you were irritated on the previous call, take a few minutes to calm yourself and start fresh. The customer will respond to your tone. Your upbeat mood will be contagious, and you are likely to get a more positive response from the customer.

#3 SPEAK PROFESSIONALLY AND AUTHORITATIVELY

Most of us take our speaking voices for granted. But the tone, pitch, inflection, and even the speed at which you talk can have a powerful influence on your listener. Think about typical news anchors or radio commentators. They have voices that command attention. With a little effort, you can develop one too.

Script your prospective debt collection call opening, record and listen to yourself. Make adjustments as needed, and try again. This will not only improve how you come across on the phone, but it will also build confidence. Taking a little extra time and work to prepare yourself for a call will help you be a successful debt collector. Remember, success is strongly linked for preparation.

Here are a few good collection phone call tips that might help:

• Don’t chew gum or drink when you’re on the phone
• Speak a bit slower and enunciate
• Use a lower-pitched voice
• Pause more often
• Make sure you pronounce the ending consonants of words and don’t slur
• Smile while you talk — although the person on the end of the line can’t see it, they will hear it; and everyone responds more openly to a smile than to a scowl

Adhering to these simple collection call tips will greatly improve your telephony skills and give you the authority to command the conversation.

#4 TAKE CONTROL AND DON'T LET GO

You can manage the call in such a way that you control the customer’s response. In addition to what we already mentioned about preparation and voice, here are some good debt collection techniques:

ADDRESS THE CUSTOMER BY NAME THROUGHOUT THE CONVERSATION. This shows respect on your part and commands their attention. Be careful not to overdo it though, or it will start to sound contrived and annoying.

MAKE THE CUSTOMER RIGHT, EVEN WHEN THEY ARE WRONG. You may not agree with what they’re saying, but you can still validate it. After an objection or excuse, say, “I can understand why you feel that way.” Or, “I can certainly see how something like that might happen.” Validating what the customer has to say maintains open lines of communication. Understanding their point of view, even as you share yours, will disarm the customer’s defensiveness.

ASK OPEN-ENDED QUESTIONS. Try to get the customer to give you as much information as possible. For instance, bank information is critical, yet many customers may not want to share it. Instead of coming straight out and asking, “Where is your account?” try “Will you be sending a check or paying by phone?” If they say “a check.” You respond, “That’s fine. So we don’t miss it, which bank will it be drawn on?”

LISTEN CAREFULLY AND TAKE NOTES. You will get clues as to whether the customer is serious about paying. You’ll also have ammunition for your next debt collection call and will be ready to counter any excuses that may have been tried in the past.

USE SILENCE. Count slowly to five before responding to a customer statement, and wait several seconds after asking a question. Leaving silent pauses in the conversation compels the debtor to fill them in.

STAY FOCUSED. Some customers will try to get you off track by complaining about service, or somehow shifting the blame for their delinquency to you. Be polite, even validate their opinion, but always bring them right back to the point of your call — getting paid the money rightfully due to your company.

DON'T LET THE CUSTOMER MANIPULATE YOU. A screaming customer could be using anger as a ploy to get you upset and end the conversation. At the very least, you’re not going to get anywhere with someone that’s angry.

If a customer starts yelling or using abusive language, stay calm. Try reminding them that you cannot help resolve the situation if they are yelling. If that doesn’t work, say something like, “This obviously isn’t a good time for you. When can I call you back?”

You could also try a tactic that one of Cadex’s debt collectors employ. Say, “Could you hang on a moment? I can’t understand what you’re saying.” Put the phone down for several seconds, then pick it up again stating, “I’m back.” That few seconds of silence will often calm the customer down enough so that you can carry on with the discussion in a more reasonable manner.

#5 NAIL THINGS DOWN

A debt collection call that doesn’t result in a commitment from the customer is a wasted call. If you can’t get them to commit to payment in full, get a promise of something — a partial payment or a call back with a payment date. Make sure you control the timing. Don’t ask, “When can you get back to me on this?” Rather, ask “Will you be calling me by Wednesday?”

Don’t hang up the phone without summarizing the results of the call. Review their commitment, your expectations, and the consequences if your expectations are not met. Emphasize the urgency of the matter. It’s easy for the customer to forget what you’ve agreed upon as soon as the call ends, especially if they don’t think you were really concerned about the outcome.

Stress the importance that the customer call you back on the date they promise payment — to let you know the check has been sent. If they fail to call, the payment likely didn’t happen. You won’t waste time waiting for a check that was never mailed.

And finally, if the customer doesn’t follow through on their commitment, make sure you follow through on the consequences. If you don’t, they will never take you seriously.

#6 LEARN TO BE FLEXIBLE

Following the above advice will help improve the effectiveness of your collection phone calls, but there is no magic formula in debt collection. Every customer is different. What works really well with one, may get you nowhere with another. Listen carefully to the customer and you will pick up clues for the best way to collect debt effectively.

ABOUT THE AUTHOR

Robert M. Tharnish is a Certified Senior Collection Professional and Senior Vice President of Attorney Network Services at Cadex. He manages global collections for key clients and is responsible for monitoring the performance of our worldwide affiliate attorney network.

Bob began his career at ABC-Amega in 1978, and has held various positions within the organization. He has given numerous industry-related presentations, including a series of lectures on “Credit and Collections in the U.S.” for the British Department of Trade & Industry.

The Right Time to Start Payment Plan Negotiations

When it comes to setting arrangements for a payment plan with the customer, collectors can take many steps to start negotiations on the right foot.

As an example, assume that a given customer has a legitimate reason to try to set up an arrangement for installment payments. Two common instances are insufficient income or assets that allow the customer to file for Chapter 7 bankruptcy. These situations make it nearly impossible to collect on all the debt owed. As a result, working out a payment plan can be advantageous when the risk of collecting nothing is so high.

Utilize Smart Negotiation Tactics

The simple rule when it comes to any form of negotiation is to never bid against yourself. If a customer explains they can’t come up with a full and immediate payment, the response should always be, “How short of the full amount are you?” Limit your own talking by concentrating on the debtor’s words, and use strategic pauses to draw more explanation from the debtor. These are two of the more critical telephone negotiation practices to remember.

The point is to extract from the customer the amount and frequency they claim they are capable of paying. If you give them a figure, you could quite possibly be bidding against yourself. Once that occurs, you’ve lost control of the situation. Also, be aware that, no matter what figure or term he may offer, you can take for granted that it’s understated.

Therefore, you should always be prepared to make a counteroffer. For instance, you could state, “I may consider that offer if you can make it more palatable by including a series of postdated checks” (or a promissory note or personal guarantee, etc.). While the customer on the other end of the phone may protest your suggestion, you are now in control.

Stay Realistic with Repayment Time Frames

Perhaps the most important aspect of negotiating payment plans is having a concrete understanding of what caused the customer’s delinquent payments. This helps discern whether settling a debt for less is suitable and determines a proper time frame for their recurring payments.

Once you reach an agreement with the customer, always confirm payment arrangements in writing. This could be a promissory note, personal guarantee from the customer, or even a signature from a third-party guarantor. If the customer defaults on their payments, you will have a legal safeguard in place. For promissory notes, it’s critical to highlight any clauses in yellow and be aware of legal considerations around the world.

In conclusion, it is always important to remember you should never, ever bid against yourself.

To make the most effective debt collection calls you must be prepared. Learn how the pros get payments for their clients. Debt collection call scripts are essential for effective communication between debt collectors and customers. They can help turn difficult conversations into positive outcomes.

Here are three real-world examples of how carefully written debt collection call scripts can make a big difference.

Debt Collection Call Script #1: Past Due Balance

PROBLEM: Michelle, who works for ABC Incorporated, reached out to Denise Smith through phone calls, voicemails, and emails. The reason for contacting Denise was that her company owed money to ABC’s client, HotSpot, and the overdue payment was to be made by the next business day. Denise was concerned because she wasn’t sure if her account was still open, and she wanted to see the invoices and receive confirmation from the client that her account was closed.

COLLECTOR (MICHELLE): Thank you for calling ABC Incorporated. This is Michelle.
CUSTOMER (DENISE): Hey Michelle, it’s Denise Smith. I have sent you an email and left you a message last week, but I didn’t get a response. And now I received an email stating that I need to have this account resolved by end of business day tomorrow.
COLLECTOR (MICHELLE): Hi Denise, I received the email that you sent over the weekend, and I did reply the next day. I also received a voice message and I called back, but I hadn’t heard back from you in over a week. Do you have payment status for the past due balance?
CUSTOMER (DENISE): My concern is, is this account closed?
COLLECTOR (MICHELLE): The account is not billing, as far as I can tell. I can’t speak to that 100%. I don’t see any more recent bills than September 2016. So I’m going to assume that it’s no longer billing. I can confirm with HotSpot if you’d like.
CUSTOMER (DENISE): Well, that’s kind of… I mean, no one knows what this is, you know what I mean? Like, not even our IT guy knows. And I need to make sure what this is because I’m not going to pay something out of the blue we have no idea where it came from. Can you just let us know that this is at least closed?
COLLECTOR (MICHELLE): I can confirm with our client, but as far as the balance here that stands open, what’s the next step for you on the balance?
CUSTOMER (DENISE): Well, I’ll go ahead and I’ll pay it. Um, what’s the total again? $1,400?
COLLECTOR (MICHELLE): It’s $2,438.01
CUSTOMER (DENISE): Okay, can you send that bill to me, and I’ll just pay tomorrow?
COLLECTOR (MICHELLE): Okay, I can send you copies of the invoices.
CUSTOMER (DENISE): Yes, just send it to me right now, and I’ll get it paid tomorrow.
COLLECTOR (MICHELLE): And how will the payment be made?
CUSTOMER (DENISE): We’ll figure it out.
COLLECTOR (MICHELLE): I’ll submit something to HotSpot to confirm that they’re no longer billing. As I said, the last bill here is dated from September, so I’m assuming that they stopped billing at that time. I’ll confirm with them and relay their response to you. You’re going to mail a check tomorrow, or were you planning to call back to make the payment?
CUSTOMER (DENISE): I actually have to mail a check. I don’t have a credit card to give you.
COLLECTOR (MICHELLE): We can take a check by phone if that’s easier for you.
CUSTOMER (DENISE): No, that won’t work. We have to send a request, and they mail the check, so I wouldn’t have a check number to give you.
COLLECTOR (MICHELLE):  I’ll make a note on the account stating that you’re planning on paying the invoice with a check after you review it. I’ll send over copies of the invoices, and then I’ll confirm with you as soon as HotSpot gets back to me on the billing questions with the account.
CUSTOMER (DENISE): Okay, perfect.
COLLECTOR (MICHELLE): All right, is there anything else I can do for you?
CUSTOMER (DENISE): No, I don’t think so. Okay, thank you so much for everything, and hopefully, um, you’ll be able to make sure that everything’s totally ended.
COLLECTOR (MICHELLE): Definitely. I’ll let you know as soon as I hear back from HotSpot on that.
CUSTOMER (DENISE): Okay, thank you so much.
COLLECTOR (MICHELLE): Okay, thanks. Have a good day.
CUSTOMER (DENISE):Okay, bye.

SOLUTION:  Denise agreed to pay the money she owed and asked for copies of the invoices to look over before sending a check. Michelle agreed to send those invoices and said she’d check with the client for more information. The call finished with Denise feeling hopeful about resolving the issue, and Michelle promised to keep her updated once they heard from the client. They discussed Denise’s worries, how she planned to pay, and made a plan to sort everything out.

Debt Collection Call Script #2: Cash Flow Problem

PROBLEM: The customer, Dustin from BBE Company, has a debt of $9,025 to ZYX Company. He’s unable to make an immediate payment due to issues with his accounts receivable and because his company is facing financial constraints.

CUSTOMER (BBE COMPANY): BBE company
COLLECTOR (JESSICA): Hello can you please connect me with your accounts payable department?
CUSTOMER (BBE COMPANY): Can you please tell me where you’re calling from?
COLLECTOR (JESSICA): Sure! My client is ZYX Company and I’m calling on their behalf.
CUSTOMER (BBE COMPANY): Hold on one moment please.
CUSTOMER (DUSTIN): Hello.
COLLECTOR (JESSICA): Yes, hello who am I speaking with please?
CUSTOMER (DUSTIN): Dustin
COLLECTOR (JESSICA): Hi Dustin, my name is Jessica Jones and I’m calling with ABC Incorporated. ZYX Company has placed a balance for collection in the amount of $9,025.
CUSTOMER (DUSTIN): Okay
COLLECTOR (JESSICA): I’m calling to confirm a payment on that balance will be made today.
CUSTOMER (DUSTIN): Right now I’m having trouble with my receivables. Once I start having some money coming in, I plan on paying them.
COLLECTOR (JESSICA): Okay. I understand your situation, but these invoices date back to June. If you are unable to pay the entire balance at this time, we can set up a payment plan over the next few months. But you need to at least start by making a partial payment towards the balance today. We can take a check over the phone or even a Visa or Mastercard. We can just start knocking away invoices for you.
CUSTOMER (DUSTIN): Yes, I know. My problem is my accounts receivable right now. I started a couple jobs that ended up being 90 day pays. We’re going to start getting them paid this month. There’s nothing I can do until then. Actually right now my account is in the negative.
COLLECTOR (JESSICA): I understand. Well, like I said, if we start chipping away at them invoice by invoice…
CUSTOMER (DUSTIN): Yes. Well, like I said, as soon as the money starts coming in, I will do that.
COLLECTOR (JESSICA): Okay. So the question is, when do you think that will be, sir?
CUSTOMER (DUSTIN): It should be around Christmas, or right before.
COLLECTOR (JESSICA): So you’re expecting to be able to take care of this within the next two weeks?
CUSTOMER (DUSTIN): Yes, I should be able to.
COLLECTOR (JESSICA): Okay, I’m going to need you to call me back when those funds are available. If I do not hear from you, I will contact you on Thursday, December 22nd and we’ll take care of payment at that time.
CUSTOMER (DUSTIN): Alright.
COLLECTOR (JESSICA): Do you have my contact information, Dustin?
CUSTOMER (DUSTIN): I should, yes.
COLLECTOR (JESSICA): Let me give it to you again just to be sure. Are you ready? My number is 555-883-5354.
CUSTOMER (DUSTIN): Got it.
COLLECTOR (JESSICA): Okay. Do you have an email Dustin?
CUSTOMER (DUSTIN): I do.
COLLECTOR (JESSICA): Can I have it please?
CUSTOMER (DUSTIN): Dustin at BBEcompany.NET
COLLECTOR (JESSICA): Let me read that back to you. It’s D-U-S-T-I-N at B as in boy, B as in boy, E is an elephant company.net is that correct?
CUSTOMER (DUSTIN): Yes, that is correct.
COLLECTOR (JESSICA): Okay. Dustin, I’m going to send you an email confirming our discussion today. My contact information will also be on that email should you need it. If I don’t hear from you sooner, I’ll call you on Thursday, December 22nd. We will work on paying down your $9,025 balance with ZYX Company.

SOLUTION: The debt collector, Jessica Jones, who works for ABC Incorporated, has a helpful solution. She suggests a payment plan and is open to receiving smaller payments over time. Jessica works with Dustin to make a plan that fits his financial situation, and they agree on a date for the payments. She gives Dustin her contact information and promises to stay in touch to help him sort out his debt. This conversation acknowledges Dustin’s financial difficulties and offers a solution that’s considerate of his situation, making it easier to manage the debt.

Debt Collection Call Script #3: Missing Invoice

PROBLEM: The collector, Kim, from ABC Incorporated is trying to confirm an invoice payment on behalf of Hound Dog Restaurant Group. The customer, Dan, is unable to locate the invoice and requests a copy to verify the payment.

CUSTOMER (INFOTECH): Good morning, Infotech.
COLLECTOR (KIM): Good morning, my name is Kim. I’m with ABC Incorporated. I’m trying to reach accounts payable for Hound Dog Restaurant Group.
CUSTOMER (INFOTECH): Okay, please hold.
COLLECTOR (KIM): Ok, thank you.
CUSTOMER (DAN): Accounts payable, this is Dan.
COLLECTOR (KIM): Hello, my name is Kim. I’m with ABC Incorporated. Do you handle payment for Hound Dog?
CUSTOMER (DAN):  Yes.
COLLECTOR (KIM): Great. I’m calling to confirm that the payment of $2,325 was made for invoice 71688544 for Hound Dog Restaurant Group.
COLLECTOR (KIM): Do you have the confirmation or receipt number for that payment?
CUSTOMER (DAN): I don’t know what you’re talking about. What’s the invoice number?
COLLECTOR (KIM):  It is 71688544 for $2,325.
CUSTOMER (DAN): What is the invoice date?
COLLECTOR (KIM): May 3rd, 2016.
CUSTOMER (DAN): Okay, I don’t show that invoice in our system. Can you send me a copy?
COLLECTOR (KIM): I see that Hound Dog sent the original invoice in April of last year. If that helps you locate it.
CUSTOMER (DAN): I can’t find it here. Can you resend it to me?
COLLECTOR (KIM): Certainly, I can email a copy to you directly. Can you please confirm your email address?
CUSTOMER (DAN): Yeah, it’s hounddog.ap@infotech.com.
COLLECTOR (KIM): Okay, let me read that back to you. That’s hounddog.ap@infotech.com.
CUSTOMER (DAN): Yeah.
COLLECTOR (KIM): And what is your direct phone number in case I need to reach you with any other questions?
CUSTOMER (DAN): It’s 555-867-5309.
COLLECTOR (KIM): Okay, I’ll send that to you now. You should see the email in your inbox in a few minutes. Once you review the invoice, please reply back with payment status. My contact information is listed on the email as well if you have any other questions.
CUSTOMER (DAN): Okay, thanks.
COLLECTOR (KIM): No problem at all. So the email is on its way to you now, and I’ll look forward to your reply. If I don’t hear back from you, I’ll touch base tomorrow afternoon at 555-867-5309.
CUSTOMER (DAN): Okay, sounds good.
COLLECTOR (KIM): Is there anything else I can do for you?
CUSTOMER (DAN): No, I think that’s all we need.
COLLECTOR (KIM): Okay, thank you for your time. Have a great day.
CUSTOMER (DAN):  Thanks.

SOLUTION: Kim kindly offers to send Dan a copy of the invoice via email. She makes sure to get Dan’s email address and phone number to ensure smooth communication. Kim then asks Dan to check the email for the invoice and let her know the payment status once he receives it. She also reassures Dan that her contact information will be in the email in case he has more questions. This conversation is all about resolving the problem of the missing payment confirmation by giving Dan a way to easily double-check the payment details.

The Importance of Well-Prepared Debt Collection Scripts

This article reviews a sampling of actual collection calls made by representatives of a collection agency to illustrate how following debt collection call scripts can make a big difference in real-life situations. It’s not just about the words on paper; these scripts include strategies that bring debtors and collectors closer together, leading to solutions that are about more than just money. They remind us that successful debt collection is about using the right words, understanding each other, and being committed to finding solutions.

Best Practices for Collecting on Your Customers’ Past Due Accounts

Heading towards the end of each month and when quarter-end is nearing, many creditors scramble to get their accounts receivable up to date. In fact, most companies wait until an invoice is past due before taking any action at all. But why not be proactive?

The following strategies can be used to get accounts paid before they are due and speed up the collection process.

1. UPDATE YOUR A/R MANAGEMENT SOFTWARE.
Ineffective systems not only slow the process down but fail to provide the intelligence required to improve your credit to cash results.

2. REEVALUATE YOUR LOCKBOX PLACEMENT.
If you use one or more lockboxes, do a study to determine if they are placed in the optimum location for collections. Lockbox studies should be done periodically, and lockbox business should not be automatically given to a local bank. Depending on the amount of business going through your lockbox, more than one location may be desirable.

3. REVIEW YOUR POLICY REGARDING BILLING DATES AND PROCEDURES.
Make sure invoices are mailed on a regularly scheduled basis and that they include all necessary information. Include your payment terms and any past due interest charged on the invoice itself. Some companies have sped up collections simply by changing their billing cycle from twice-a-month to once-a-week. Another idea is to invoice early in the month. Many companies do a once-a-month check run and, if your invoice happens to miss their monthly run, you’ll have to wait another 30 days to get paid.

4. REVIEW THE TECHNOLOGY YOUR COMPANY IS UTILIZING TO INTERACT WITH CUSTOMERS.
Are you using e-mail, imaging, EDI, faxes, voice mail, electronic bill presentment and payment? While all might not be appropriate for your organization, using one or more might speed things up.

5. DISCUSS YOUR TERMS WITH YOUR BUYER AT THE TIME OF SALE.
Make sure they are agreeable. Also, discuss the best way of getting paid before you ship or begin work. Will it speed up payment if you send the invoice to the actual buyer rather than the Accounts Payable department? Who has to authorize it?

6. MAKE IT EASY FOR THE CUSTOMER TO PAY YOU.
This may seem like common sense, but it’s an element that is often overlooked. Offer all standard payment options. Ensure that your invoices have the correct contact information and postal address for remittance. Include a payment envelope with the correct remittance address. Use invoices that make it easy for the customer to remit, as well as easy for them to keep a record of the invoice and payment.

7. REVIEW YOUR EXPERIENCE WITH THE LATE-PAYING CUSTOMER.
Has this customer been a consistently late payer? Does he wait until you call, before paying you? Has anything changed with the customer? Knowing how your customer responds and what he needs to get him into payment mode can give you the edge in keeping his account current.

8. REVIEW YOUR COMPANY’S OVERALL PROCEDURES TO SEE IF YOU CAN DETERMINE WHY PAYMENTS ARE LATE.
Are there any procedures that you can tighten up to in order to speed up payments? For instance:

• Are shipments accurate? Were delivery and quality promises kept by your firm?
• Are your salespeople making promises your company isn’t able to keep?
• Are invoices being sent timely? Are they accurate? Do they include all necessary information, including a phone number for billing inquiries? Were they sent to the correct address and attention?
• Are follow-up contacts being made on a regularly scheduled basis?
• Are you placing with collection professionals on a timely basis?

9. DEVELOP A SPECIFIC COLLECTION PLAN AND STICK TO IT.
For instance: Call 7-10 days prior to the due date to ensure the products/services were received timely, there are no disputes, and the customer plans to pay (and when). Call within a week after payment is due to find out what is delaying the payment, and to get a payment commitment from the customer. If the customer reneges on their payment promise, contact them again until payment is received. If it's not received within 90 days after the due date, hand off the account to the professionals. If possible, and especially for larger past-due balances, don’t rely on letters, faxes, or emails, which can be easily ignored or "lost” in transit. Make a phone call.Very important: record any promises made by the customer, including the date they were made and the date payment was promised. Saying to a customer, “When we spoke on Monday, May 25, you promised payment by Friday, May 29”, puts the debtor on the spot ” much more so than a vague recollection of the conversation.  If you can't manage to stay with a collection schedule in-house, consider outsourcing to a first-party collections outsourcing firm.

10. CREATE “COLLECTION SPECIALISTS” WITHIN YOUR CREDIT DEPARTMENT AND PROVIDE SOME COLLECTOR TRAINING.
If everyone in the department has multiple responsibilities, you can be sure that collecting will be the last thing they do. Why? Because it’s uncomfortable to ask for money from customers.

11. RECRUIT BRANCH MANAGERS AND SALESPEOPLE TO HELP IN THE COLLECTION EFFORT.
In many cases, these are the people closest to the customer with the greatest ability to impact the collection cycle.

12. AFTER A REASONABLE PERIOD OF TIME (SAY, 30 DAYS) CONTACT THE PERSON THAT DIRECTLY PURCHASED FROM OR HIRED YOU.
Send them a copy of the invoice. If you are supplying to a medium to large business, it’s likely the person who bought your product or service has nothing to do with Accounts Payable. However, they're usually happy to help, especially if the product or service was “as promised”.

13. DEVELOP A PERSONAL RELATIONSHIP WITH THE ACCOUNTS PAYABLE MANAGERS AT YOUR LARGEST CUSTOMERS.
If more than one person handles your account, always ask for the same person and attempt to develop a rapport with that individual.

By taking some steps to improve your billing and collections process, you can go a long way toward getting your sales finalized sooner and more efficiently. Going proactive on this is like money in the bank.