Psychologists tell us that up to 90% of our behavior is habitual.
If you have a habit of letting your receivables get overdue, which is one of the most common unsuccessful habits, you will always get a predictable result. Negative habits breed negative consequences.
If your negative habit is letting your accounts receivables get overdue you want to choose a better, more successful habit to replace that. There are steps you can take to change this habit:
1. Review your accounts receivables weekly or at the very least, monthly.
2. Stay motivated by trying to collect as much money as possible.
3. Stay focused; don't let excuses veer you off track.
Once you have these habits in place, keeping your receivables up to date will be your new habit and a habit that makes you more money and helps you grow your business. Those are the kinds of habits we want and that can determine who is successful and who is not!
You may want to train yourself or your collectors or Credit manager for their debt collection tasks. Some areas that you or your staff may want training in are:
• Developing a telephone voice
• Refining Listening skills:
When you call a debtor and you state the reason for your call or ask a question, wait for them to answer. No matter how long the pause is, let them break the silence.
• Managing the emotional side: Debtors will get upset that you are calling them. They will cry, yell, swear and hang up on you. When a debtor starts telling you his life history of despair and how this affects why they cannot pay, you need to be able to have compassion for the situation but offer a solution to get the debt paid. Such as a payment plan or different options for payment.
• Preparing the pre-call plan: Before you ever make a collection call you need to research the account. Before you dial you need to know the invoice number, date, amount that is past due, how past due it is, the payment history, details of the order and if there were any disputed items. When the debtor asks you a question you need to answer immediately whenever possible. This shows the debtor that you are serious.
• Making opening statement: Your opening statement should be brief and to the point. You need to identify yourself and your company, state why you are calling and what you want./ An example would be: Hi, this is Michelle from KTM Auto calling about your balance of $500.00 on invoice # 1234 dated 4/1/05. I am calling today to take your payment over the phone to clear this balance from your account. Would you like to pay with a check over the phone, debit or credit card? STOP! Let the debtor break the silence after your question and remember, always assume the debtor will pay.
• Asking questions with precision and Making the transition to the payment arrangement- All your questions should be clear and to the point with silence after each question.
Example: Debtor: I can't pay, I don't have any money
Collector: Are you working?
Debtor: Yes, but I just started a job and don't get paid for two weeks.
Collector: What day will you get paid?
Debtor: Friday
Collector: Okay, then you can mail a money order for $25 on Saturday.
This example can go so many different ways depending on the debtor's responses. You have to be positive and get them to agree to make a payment. Once you reiterate what is going to happen, send them a confirmation letter with a payment envelope. Then call them on Friday to remind them about mailing the payment. An example of what you could say could be:
"Hi this is Michelle from KTM Auto, calling to confirm you will be mailing a money order for $25 tomorrow, Saturday. " Remember, as a debt collector you must do the following:
• Manage the emotional side
• Prepare your pre-call plan
• Make the opening statement
• Ask questions with precision
• Make the transition to the payment arrangement
• Handle Objections - You need to become familiar with common debtor objections. The best way to do this is to make collection calls.
• Closing the call - Your last statement should reiterate everything covered in your call. Repeat all actions that will be taken. Example:
"Okay, on Saturday you will mail a money order for $25 in the envelope I send you today. Then you will send $25 a month every Saturday until May 15th."
You cannot be to clear and follow up is the key to success. If you don't follow up on any of the above actions, you are wasting your time and money.
Michelle Dunn, author of an award winning book has spent the last 18 years stepping into dangerous debt collection potholes. She shares her hard-won expertise on debt collection with the titles in her "Collecting Money Series." She is the founder and president of Never Dunn Publishing, LLC and her 10 year old Credit & Collections Association with over 1075 members. Michelle started and ran M.A.D. Collection Agency for 8 years. Visit http://www.michelledunn.com and http://www.credit-and-collections.com for more information.
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