Tips for Debt Collection – Part 3
Start with Payment in Full
When your accounts receivable team calls someone in their debt collection process, they should ask for AND EXPECT, full payment of the debt, always. Do not begin the conversation with compromise, as you then have nowhere to negotiate to. You will likely hear either “Yes, I’ll pay”, “No, I won’t pay” or a An uncertain response, or no response.
If you receive a negative answer, :”No, I won’t pay” then the door is open to engage a dialogue as to why. Is it “can’t” instead of “won’t” is there a dispute, whatever the NO answer is, the door has been opened to engage a dialog, one that might not necessarily include compromising on the amount owed. ,
Apply pressure. If the debt is significant enough, and you hear “can’t” instead of won’t, perhaps demand to see a financial statement, proof of their inability to pay. Chip away to see if the excuse is legitimate, you just might shake out the past due amount. If you do get Financial statements, you will then see if the debtor could pay, or if there are adequate assets to warrant escalating the collections process to an attorney to attach assets with a florida judgment.
. You ask for a financial statement if the debtor needs to buy product from your company or if he is requesting a payment plan. Financial statements consist of an operating statement and a balance sheet. Total of assets column equals total of debt net worth column. You want to know if the debtor’s current flow of cash is sufficient to pay your debt. Pay particular attention to the bottom of the financial statement. If the assets exceed the liabilities, the debtor is in good shape and can pay his debts!
Conversely, you might get an affirmative response, “Oh, thanks for the reminder, I’ll get accounting to cut that check right away” More likely though, you will have to aggressively nail down a future promise. Collectors and debt collection attorneys can attest, some debtors will say anything, just to have you go away, even if only for today, knowing full well that when the promise is broken, you will be back on the pone te next week.
When you get a promise – drive towards extreme specificity, as it tends to make the debtor more accountable. “I’ll get to that right away” should be followed on your part with, “What days do you cut checks?” “Friday, well allowing for 4 days for the mail, and the weekend, that means I should see your check on Wednesday.. is that right Mr. Debtor? I’ll put a note in my calendar on Wednesday to confirm with you that we received your check.
It is clearly not in your best interest to begin the collection process with a compromise. Using phone collections methods appropriately is far more likely to result in prompt, and full payment. When this fails, there is always the fallback option of compromise, or passing the debt on to a professional.
