Collection Tips

Here's a series of collection tips that may help you improve your technique:

• Whenever possible, do your debt collecting in person. If that's not possible, do it by phone. Write a letter only if neither of the other two options are available to you.
• When you contact customers, don't hand them an excuse ("Did you receive your bill?"). It's better to ask them, "When was payment made?" If they tell you it hasn't been made, ask them if they intend to pay it today. If they say "no," ask them when they have scheduled it to be paid. Get a commitment from them.
• If they haven't scheduled it, ask them if they intend to pay the bill. If they say "no," ask them why. Once you have the reason, hang up or walk away. If you continue the call or visit at this point, you may be crossing over into harassment. You can wait a day or two and call back to confirm the customer's position, but don't call or visit more than twice if they say they don't intend to pay the bill. At this point, it's time to turn to a collection agency or lawyer.
• If you ask your customers if they intend to pay their bill, and they say "yes," you should continue the discussion. Ask them why they haven't paid it. They'll give you either a reason or an excuse. In either case, get a firm commitment from them for when they can pay you.
• If they give you an excuse ("I can't pay you until my customer pays me"), don't respond emotionally. Use logic instead. Ask them for a definite commitment and a time frame in which you can expect to receive payment. Make sure that you agree on all the details, including when, how, and where the money will be paid ("I'll deliver a check to your place of business on Monday").
• If they give you a reason ("The goods you delivered to me were damaged"), try to remedy the condition, if it's within your control. For example, if you agree that the goods were damaged, see that the customer gets undamaged goods.
• If they refuse to give you a commitment ("I'll put you on the list to get paid"), you'll have to review your options. In some cases, you can force a commitment by taking away their credit on future purchases. In other cases, your only two options are to turn it over to an attorney or turn it over to a collection agency. (There's actually a third option, if you're interested: bringing suit yourself.)
• If you deal with large companies, you need to get in tune with how they pay their bills. Find out from them when the last day is for getting an invoice approved to get into this week's (or bi-week's or month's, depending upon how they pay their bills) check run. When you need to collect from them, call a couple of days before that date to make sure that they have all the documentation from you that they need.

If you do business with the government, consider taking a government-sponsored seminar on how to get paid. They're offered quarterly in all major cities.

• If you have a problem with payment from a large company, the person you need to talk to is the one who is responsible for buying your goods or services (perhaps in the purchasing department). If you have a salesperson, ask who he or she deals with. Don't allow yourself to be sent to accounts payable. Your best leverage is to threaten to withhold your goods or services if payment is not made. While the purchaser may respond to that threat, the accounts payable person almost surely will not.

If possible, you may want to call your customers who pay you on time and thank them for doing so. The call may solidify your relationship with them.