How to Make Collection Calls that Keep Customer Relationships

By Julie Rains on 3 April 2010 (Updated 25 April 2010) 0 comments
Photo: dem10

"Collections is the process of completing the sale," according to Abe WalkingBear Sanchez. As the endorsed Credit Consultant to the 4500 combined members of STAFDA and PEI trade organizations, he advises companies to make collection calls using a positive, sales-oriented approach.

Adopt a relationship-building mindset prior to making a call to collect on past due balances. Focus on uncovering customer needs, addressing concerns, proposing solutions, fixing problems, and continuing to promote your company as a valued resource to customers — especially those with potential for repeat business.

Research First

Some business owners may be able to pick up the phone and start a meaningful, rewarding conversation with customers...and quickly resolve any problems and collect all money owed within minutes. Some situations call for simple actions. For example, if you've shipped an off-the-shelf product and have a signature confirmation of its receipt, then making a quick call — without investigating the details of the transaction — is a reasonable next step.

Research is advisable when collecting payments on complex transactions or past-due invoices valued at thousands of dollars. For example, if your company has just delivered a newly developed chemical guaranteed to reduce water treatment costs, made a major upgrade to an office building, or added RDFa tags to a website, then taking a moment to review all communications and invoices before dialing (or making an office visit) can be crucial to having a productive conversation.

Review and have handy before making a call:

  • Proposals and statements of work

  • Sales agreements including special pricing, guaranteed delivery dates, and product performance requirements

  • Vendor compliance manuals

  • Invoices with original prices and balances owed along with due dates

  • Customer's mailing address, or email address for online billing

  • Documentation of orders and deliveries, such as purchase orders and customer signatures

  • Proof of compliance with customer requirements, such as lab test results indicating quality certifications

Call

Put yourself in a relationship-building frame of mind with the dual goals of assuring customer satisfaction and getting what's owed to your business. An empathetic, confident tone of voice invites honest discussion.

Take these steps:

  1. Call your customer contact.

  2. Tell who you are, what company you represent, and the product or service your company provided to the customer, even if your contact should know this information.

  3. Explain that you want to confirm that the customer received the product or service according to specifications.

  4. Ask if the invoice was received.

  5. Remind your customer of the payment terms and due date, and ask if there are any issues yet to be resolved that your company can handle right now.

  6. Request payment and give options for immediate actions: suggest a charge card payment over the phone or walk the customer through an online payment.

At some point in this conversation, the customer may explain to you why the invoice hasn't been paid. It's likely that you'll reveal a glitch in your company's or your customer's business processes; or an obstacle to your customer's ability to pay.

Problems you may encounter and possible paths to resolution:

  • Your customer contact is not the person who authorizes and issues payment. Determine who else is involved and what actions will spur your customers to release payment.

  • Your company didn't comply with sales agreements and vendor requirements. Address internal problems that resulted in service failures, such as a late delivery, incorrect packaging, or an incomplete order. Make adjustments to invoices for chargebacks and ask customers to pay corrected invoices.

  • The customer doesn't have records that your company performed as promised. Show documentation that you have fully complied; then ask the customer to correct its records, verify that all information needed to authorize payment has been received by the customer, and request payment (again).

  • There's a problem with the invoice or the customer didn't receive the invoice in time to remit payment by the due date. Make sure your company is set up as a vendor by the customer and that the invoice is complete.

  • The customer doesn't have the cash because of an unexpected expense, sudden fall in sales, or delayed payment from its customers. Ask for a renewed commitment to pay and revised schedule with due dates and specified forms of payment.

Timing calls can be crucial. WalkingBear, a recent panelist and featured speaker at the World Credit Congress in Dublin, recommends calling commercial accounts on Mondays, creating momentum that builds throughout the week. Call consumer accounts toward the end of the week, as many people get paid on Fridays. Begin with your largest accounts for the strongest impact on cash flow. And, don't wait until a bill is seriously past due but make a call quickly after the due date.

Finally, Follow Up

Document commitments and follow up to make sure everyone adheres to promises. If a customer doesn't pay according to agreed-upon terms after you've dealt with any operational concerns, then a different approach is needed. To get payment and encourage repeat sales, find an alternative way of doing business that doesn't involve consistently asking for payments on past due balances.

As WalkingBear emphasizes in Timely Cash Flow Tips:

It's critically important to manage accounts receivable because keeping customers current leads to repeat sales. Companies can't afford to lose customers during tough times, and one way to keep them is by making sure they stay current on their accounts.
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