collection techniques

COLLECTION TECHNIQUES

PRESENTED BY: SHAHNAM TAHERIShahnamtaheri@gmail.com

2012

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Objectives of Collections

• Collect money from past due invoice• Marinating cash flow of business• Decision about giving credit to customer in

future• Educate customers to pay their bills on time• Negotiate effectively for the hard accounts

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DEPARTMENT OF COLLECTORS

Each employees should be: motivatedTrained(sales personnel, collectors)Sales personnel should be trained and educatedAbout credit policy of their company and explain

in detail to customers at the time of making sales.

Having the right information at the beginning is very important.

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Steps in Collection

• Sending reminder and notices for past due invoices

• Follow up by letters or collection• Using external collection agencies and legal

actions

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Sending Reminder

• E-mail , fax, mailing invoices and accounts statements summary at first stage

• Sending a firm collection letter for those account with 60 days overdue

• Final letter to give to collection agencies and legal action

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TELEPHONE COLLECTION

The call objective is to get the customer’s commitment to pay.

GOLDEN RULE: PREPARATTIONClear objectives of the callWho is the decision maker, who can actually

make the payment.Prepare for likely non-payment excusesPlan the best time to ringHave the correct telephone number

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Collections by telephone

• Two way communication• Stress urgency for payments of past due

invoices• Understand the customer ‘s situation• Confirm the message is received

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Effective Collector

• Knows the skills of effective communication• Has enough information about the customers’

account• Confident, determinant, and diplomat• Has ability for problem solving• Knows the credit and sales policy of his/her

company very well

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Efficient Telephone Call

• Introduce yourself, your company name and the reason for your call

• Talk to right person• Tone: professional and polite but firm• Voice: should be heard without any noise• Clarity: Ensure you are understood• Be diplomatic• Emphasis for payment the past due invoices

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Telephone collection: Continue

• Have the name, extension number, job title or position of customer contact

• Be away from all noise and distractions• Have to hand invoice number,PO number, proof

of delivery• Have the details of the last telephone contact• Aware of any queries raised and resolved• Do not chew or drink while you are talking• Smile

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Continue….

• Having confidence and full and accurate ,updated debt information is essential.

• Collector should know his authorities during negotiation with customer. They should aware about company’s policies about “deals” with some special customers.

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Effective Contact

• The collector should be clear how to approach the contact : surname, title, first name

Make sure you’re talking with the right person.You only get one chance to make a first

impression!Any frustrations experienced in connection

must not be carried forward into actual conversation.

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Effective Contact

• Have every required documents in your hand before any calls

• Voice tone: the tone should be displaying the firmness needed to gain commitment of the overdue debt.

• Professionalism: Use a respectful language• Friendliness in the voice not in jargon language• Do not read from a set of script• Time of the call: early morning

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Content of the call

When you contact with right person, it is important you as a collector to control the conversation and develop the dialogue.

Mention exact amount of the debt: At the beginning of the call Again during the call And again at the end of the call when

confirming the amount promised.

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Content of the call

• Ask open-end questions:• “Where did you say you sent the cheque,Mr.

White?”• “When you will be sending us the cheque,Miss

Black?”Use silence at the end of each question to add

strength to the point being made.

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Call content

Close-ended questions• Have you received the

merchandise in March?• Do you agree there is an

outstanding balance of $3,500?

Customers’ Excuses• Listen carefully to judge the

customer’s mood to find the real reason for non-payment.

• Acknowledge the problem in a way that remains neutral.

• Apologize for some undone promises.

• Develop questions to establish that the facts are correct.

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Collection techniques

• Collectors should try to be consistent in controlling the call throughout the conversation, remain calm but firm.

• Conclude the facts: The cheque #2225 for the amount of $3,525 is

cut and will mail by courier tomorrow, to your company in Waterloo.

• Collector should not show any weakness

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During Conversation

• Be positive than critical• Be polite• Admit mistakes frankly if your company is

wrong• Get the customer attention• Get a firm commitment for payment

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Customers’ Excuses

• Send or fax the copy of invoice.• The cheque is in the mail.• We have cash problem.• Our payment terms are 60 days or we pay in

90 days.• Our accountant has gone for vacation!• We are going to liquidation.• We are waiting for our customers to pay us.

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Continue: Customers excuse

• Having a reorganization• The goods were damaged.• The owner is not here to sign the cheque.• There is no Purchase order on invoice.• Your sales rep agreed for 90 days payment.• There is a postal strike here.• The computer is down.• We can’t pay. We have no money.

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WIN – WIN POLICY

• Good collector is going for something now, or taking the customer’s proposal

• The collector uses assertive skills, not aggressive.

• He/She will listen, question, get clarification, and speak confidentially get clarification.

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Summary

• Be prepared• Be persistent• Be prompt• Be urgent• Be courteous• Be tactful• Be businesslike• Be cooperative• Be repetitive

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• Proportion of debts will remain unpaid• Some customers will not pay until they really

have to.• Independent collection agencies(economical,

open for further trade when debt problem resolved.

• Legal actions, litigation( The last resort)

Sh_taheri@hotmail.com

Financial Analyst