Collection approach

I’ve watched, noted and observed most teachings in terms of dealing with delinquent payment over decades and while many are quite sensible and rational, some are extreme and indeed dangerous to continuation of trade.

I guess most of us involved in credit management have either been guided by others then gone on to form our own opinions on what works and what doesn’t or simply played it by ear, varying technique to suit individual cases; not all clients who owe money will be the same or merit a common approach.

Most of my professional career has been in Distribution, the middle man therefore serving masters both above and below and trying to make a go of it. In such an environment, continuation of profitable trade is vital and essential to business and getting to know your industry and customers is even more crucial to successful receivables management and growth.

Understanding, recognizing and anticipating the pain your client may suffer (even feeling it at times) financially or business-wise, as well as communication at a reasonably high level is paramount to successful risk management and collection.

Sure, I’ve heard of just about every excuse possible in payment delay, we all have but the response we give and the approach we take is what marks us caring and understanding or downright irritating and rude.

I was put firmly in my place very early in my career some 35 years ago when attempting to collect a relatively small amount that was overdue by only a matter of a week. The client was a small business with a husband and wife director and very little else. On this occasion, the call was answered by the husband who explained his wife was out and he had some difficulty in being able to get to the company cheque book. I admit I was initially irritated and asked him to indicate precisely why he could not write out a cheque today. His response was that the cheque book was on top of the fridge freezer and he could not reach it. I guess I was silent for a moment but retorted his excuse was surely ridiculous. He took a moment to respond but repeated he could not reach the cheque book because he was wheelchair bound. I froze a bit but mercifully held back from laughing or responding in a derogatory way, suggesting I call back the next day when his wife would be in.

I spoke to his wife the following day and she confirmed an accident had left him paralyzed from the waist down and sadly she had placed the cheque book where he could not reach it.

My approach to collection thereafter was profoundly different in that I made a point of getting to know each and every client I spoke to and the higher up the pecking order that was, the better.

We all have a favourite response to delinquency but I did find that one I commonly used across many occasions, even with differing clients was quite an effective one, either when talking to finance, directors or buyers more specifically.

“We love your business and agreed the terms upon which we trade but tell me this, if we were 7 days late or consistently late delivering your product, would you be happy with us and continue trade?”

As a lead into discussion on late payment it sets a conciliatory tone and encourages rational argument and dialogue, limiting dramatically occasions in which one has to put the phone down abruptly or feel the call was wasted. I also found that in later years, collection was both enjoyable and consistently successful.

Aggressive collection or aggressive tone in voice even if on the second or third call is an instant barrier to successful collection. Clients generally are slow for a reason. Make a point of knowing what it is and encourage them to work around it.