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How to Make Collection Calls That Get Results

Any conversation dealing with money, especially money that’s owed, has the potential to disintegrate into ugliness. That’s why understanding human nature is just as important as understanding Days Sales Outstanding (DSO) when it comes to making those difficult collection calls. The number one piece of advice is to be prepared. Check out the following tips to ensure you maintain control of the interaction and get results.

The phone is your best collection tool

When it comes to collections, communication is the name of the game. There’s really no replacement for a real conversation. And that’s where the phone becomes your best collection tool. Phone calls are more personal in nature and provide a better connection between parties. Through a conversation, you’ll be able to read the tone of the person on the other line, which provides better insight into the nature of the issues with payment. You also can adjust your strategy as the call progresses based on what you’re hearing and the tone of the conversation overall. It’s much more difficult for the debtor to avoid the issue when you give them a call, making it a great channel to start the difficult conversation. Phone calls also are inexpensive and provide a quick outlet to gain information. Emails, on the other hand, are much easier to ignore and can take quite a bit longer to get a response. Time you don’t have when you’re trying to collect a debt.

Just like anything, it’s important to prepare before reaching out to a debtor.

Prepare for the debt collection call

Before you pick up the phone, be sure you’ve reviewed all available information about the debt, including:

  • Information about the debt itself (e.g., what is it for)
  • Any previous communications related to the debt collection
  • Amount due
  • Age of account
  • Any other open invoices (current or past due) related to the account
  • Account history (is this a persistent problem?)

It also is important to look inward to ensure all policies and procedures were followed correctly and could not have contributed to late payment. For example, you should double check that your system has been updated to account for all received payments. A delay in updating the system could result in unwarranted collections calls.

Be prepared to handle excuses, questions, and concerns. Approach the situation with a positive mindset and empathy toward the debtor. Understand that there may be extenuating circumstances that could make paying the debt difficult at this time. COVID-19, for example, has affected many businesses and could make it difficult to make payments on time. Listen carefully to what they have to say and be prepared with additional questions to dig a little deeper into what may be going on for them. Also, be prepared to address issues or even negotiate terms to maintain the relationship. A little understanding and preparation goes a long way!

Handling the collections call with finesse

You’ve gone through the proper preparations and have all needed resources in front of you. Now, it’s time to make the call. Remember to stay focused, calm, and professional. Money issues tend to be sensitive topics for most people, so the more you can approach the situation with a positive mindset and an empathetic ear, the more likely the debtor will be to have an open, honest conversation with you.

Listen to understand. There are often circumstances that may be impacting the debtor’s ability to pay on time. And those circumstances may alter your viewpoint or approach to the situation as well. Be sure to listen to their story and be engaged by asking additional questions, as needed. You’d be surprised at the insight you can gain by simply listening!

Stay focused on the issue. Developing a connection with your customer is important, but don’t lose sight of the purpose of the call. Make every effort to understand the issue and identify steps toward resolution. Be willing to negotiate terms, if needed, to maintain the relationship. But always be sure to have some type of action agreed upon (e.g., full or partial payment, updated payment plan) before you end the call.

After the call, be sure to take appropriate notes about what was discussed and the agreed upon course of action. This will be an important reference in the future should there be continued problems or questions that arise. Once completed, take a deep breath, and let it go. Collections conversations are never fun, but they are necessary.

Need help managing your commercial credit risk? MSCCM financial experts can assist you. Contact us today.