Making collection calls is an uncomfortable, yet necessary undertaking. Unfortunately, habitual debtors are skilled at snaking their way out of collection calls. According to Debt Collection Answers, U.S businesses owed a total of $150 billion in 2019, out of which only $40 billion was recovered.
Add to that startling statistic the claim of the National Federation of Independent Business , who tells us that nearly 65% of all small businesses have unpaid invoices that are older than 60 days.
Apparently, there is quite the need for managers to become skilled at making collection calls, because judging from these statistics, the question is not IF you will ever have to make a collection call, but WHEN.
To help you successfully reclaim money while maintaining a positive working relationship with the customer, in this post we will share 5 tips for making collection calls on valued clients.
You need to be mentally prepared because the tardy customer will commonly be armed with all sorts of excuses. Unless you’re consistently committed to recovering your money, late-paying customers will walk away time after time. The key is to be firm, yet maintain a friendly tone. Not everyone is skilled at negotiation, so if you aren’t; hand over the task to someone better suited than you.
Send Constant Reminders
A major reason for late payments is often due to a soft stance adopted by entrepreneurs, either because they wish to avoid confrontations or not risk offending the client. A good way of getting around this is by sending a reminder letter preferably before the payment is due.
Make the Call
If despite your reminders the client has still not made the payment and 30 days have passed, it’s time to make the call. Phone calls aren’t as easy to avoid as letters and with the right conversational skills, often times a well done phone call will result in getting an invoice processed while you are still on the phone.
Never Lose Your Cool
Although it may be tempting to let the client know exactly how you feel, never lose your cool. As a business owner or collector, your task is to figure out how to retrieve your money. Losing your temper will not achieve anything positive, and dramatically lowers the possibility of working with the customer again. Also consider the benefits in thinking outside of the box, and consider alternate payment plans. Depending on your situation, you may also want to accept partial payments.
Take Matters to Court
This should be your last resort. Start by sending a demand letter outlining your case and threatening litigation. Most debtors that aren’t scared by letters or phone calls tend to cooperate when faced with legal consequences. Don’t be intimidated by Small Claims Court. It is relatively easy to complete the paperwork required, and a huge motivator can be having a judgement that reflects poorly on someone’s credit.
For cases over the maximum threshold to qualify for Small Claims Court, taking matters to court only makes sense if the owned amount far exceeds the legal costs.