Tips for Successful Debt Collection

With the Small Firms Association (SFA) recently reporting that getting paid on time remained the most significant problem facing small enterprises in the current economic climate, it is imperative that a strict debt collection regime is adhered to, to ensure business survival.  The following tips can help in getting paid more promptly:

1. Prepare for your call – have your customer’s information at hand so you can easily reference the history of the account, the amount owed, any notes from previous contact with the customer.
2. Get the right attitude – adopt a professional, courteous attitude, never raise your voice and don’t threaten the customer.  The call is a business call as part of the contract you fulfilled.  Do not let it become personal.
3. Know who to speak to – contact the person who you know deals with supplier payments, not just the person who answers your call.  If you have no luck here, consider speaking to someone in management.
4. Control the situation – do not allow yourself to be side tracked or pushed to the side with excuses.  The point of the call is to collect debts owed – keep that the focus of the conversation.
5. Be flexible – sometimes there are other reasons which may result in your debt not being paid.  Try to identify if there are alternatives that work for you – e.g. setting up a new payment plan or agreeing a set date by which to be paid.
6. Know the next step – Be precise in your dealings and ensure that you do not end the conversation without a commitment by the customer, whether it’s to pay the balance owed or to speak to their superiors and return your call by a specific time.
7. Keep detailed notes – record the date and time of each phone call, the name of the person you spoke to and the outcome.  Make sure to note if a follow up call or letter is necessary.  This will allow you to make stronger credit decisions in future.
8. Down payments/early payments – for larger projects, consider asking customers for a down payment as work begins.  Weigh up the benefits also of introducing an incentive, e.g. a discount, for early payments.
9. Time – for long overdue balances, consider the need to place the debt with a debt collection agency or taking legal action.
10. Review the situation regularly – regular reviews will allow you to keep on top of overdue accounts.  Also issue regular reminders of overdue balances in advance of the next payment date.

See Related Article: Tips for Maintaining Positive Cash Flow for your Business