Every single small business struggles with cash flow.
And outstanding receivables is one of the most common causes of a cash flow shortage.
Its a bummer when customers don't pay their bills on time.
If you have outstanding receivables, now is the time to take action.
To begin, train yourself or your collectors or credit manager in debt collection tasks.
Developing a telephone voice is incredibly important for successful debt collection.
Here are five keys to successfully collecting your cash.
Refine Your 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.
Manage Your (and Their) Emotions
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.
Prepare Your 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.
Make Your 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. Here’s an example: Hi, this is Michelle from KTM Auto calling about your balance of $500.00 on invoice # 1234 dated 4/1/15. 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? Then STOP! Let the debtor break the silence after your question and remember, always assume the debtor will pay.
Ask Questions With Precision -- Make The Transition to Payment Arrangements
All your questions should be clear and to the point followed by silence after each question. Here’s an 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?
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. Your follow up call could be: Hi this is Michelle from KTM Auto, calling to confirm you will be mailing a money order for $25 tomorrow, Saturday.
You cannot be too clear and follow up is your key to success.
If you don’t follow up on any of the above actions, you are wasting your time and money. Take steps now to educate yourself on the collections process so you keep your cash flowing where it belongs — in your business.
Copyright 2016 Denise O'Berry | The Small Business Edge Corp. | 888.233.7448
Credit to my awesome colleague Michelle Dunn who shared these helpful tips. She's author of an award winning book who 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.