Confessions of a credit manager 4

Do you know how to collect from your customers? Good Question.  

I know because I follow the 4 Ps of Collections:

Be Prepared, Be Professional, Be Punctual, Be Persistent.  

Be Prepared.  Your customer account information will include contact information for accounts payable.  Call up the customer account on the screen in front of you, check the notes from previous collection calls and then use account contact information to call your customer.  From the screen you can give the customer invoice numbers, amounts due, dates, etc., as they are requested.  

Pro Tip:  Look at the account to see if credits have been/are being issued.  If there are credits, determine why the credits have been/are being issued so that you can anticipate a discussion about billing errors such as incorrect pricing, wrong tax rate and wrong quantity, as well as other common types of mistakes that show up on invoices.

Be Professional.  If the customer asks for invoice copies, send them, but also confirm email addresses and other information used to deliver invoices.  Keep your side of the call polite and calm.  Do not raise your voice.  Do not interrupt or talk over the customer.  Do not use bad language.  If the customer is angry, being patient will let them burn that anger off, and when they have finished being angry, you can continue with your call.  If you are professional when you make the call, you will avoid giving the customer a distraction from the main issue, which is the money.  On the other hand, if you behave badly, the call will be about your behaviour and not the money.

Pro Tip: In my experience, very few people can stay angry for long periods of time.  If you do nothing to provoke them, chances are your angry customer will “burn off” their anger and calm down.  But you have been patient and egoless.  The call is not about you, it is about them.

Be Punctual.  Keep track of what the customer promises to pay and when they promise to make payment.  Make notes about each call on your screen.  If the payment is late or the payment is light (less money than you were expecting), call them back, and politely ask why.  

Be Persistent.  Keep asking until the payment you want is received.  

Also, being punctual and persistent shows that you care about being paid.  If you are not punctual and persistent, the message you are sending to your customer is that you don’t care, and you don’t care, why should they?  

Pro TipThis is an exception to the “Be Persistent” point above.  If the past due balance reaches 30-60 days past the invoice due date, consider referring the account to an accredited 3rd Party Collection Agency.  At this point, there is still a good chance that a collection agency can recover this balance.  In my opinion, most collectors (me included) are inclined to hang on to unproductive accounts (customers who are not paying) for too long, and thereby miss the window when a 3rd party agency can be effective.

So how do you collect from your customers?

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