CHAPTER 6: COLLECTIONS
It can be very uncomfortable for the customer if only the collections person visits. A more productive visit is likely if the sales representative, who has a relationship with the customer, accompanies the collections person. This approach has many benefits, such as resolving the reasons for slow pay, as well as creating a stronger relationship by learning about the future needs of the customer and explaining how your products/services and their credit line can fill that need. These types of visits also help the sales rep and collections person work as a team to achieve higher sales and on-time payments. If this customer is important to the financial health of your company, an in-person visit should take place at most quarterly to build a stronger relationship with the customer by: a) thanking a good paying customer, and b) resolving a series of disputed and/or unreconciled balances (as your company may have a role in those disputes).
Visits for most companies will be used sparingly. Phone calls and e-mail are the most common and efficient tools in a company’s collection efforts.
ESCALATION PROTOCOL/COLLECTION TIMELINE An escalation protocol (or collection timeline) defines which actions are taken at each stage of a customer’s delinquency. It starts with friendly reminders and then escalates by stages to demand letters, holding shipments, and referral to a collection agency. The policy and procedures should clearly define when an escalation protocol can be canceled (such as a partial payment, promise to pay, etc.). All members of the senior leadership team must have signed on to the protocol, so that when it needs to be activated there is no debate or delay about which actions will be taken. Time is critically important when a customer becomes seriously delinquent. IRATE CUSTOMERS The team should be aware that an irate customer is typically a red flag. A customer uses their anger to throw a collector off track and to discourage the collector from calling them again. They also expect the collector to react emotionally. Collectors must keep cool and follow protocol. Look deeper into the customer’s account history. Call fellow AR benchmark partners to learn their current status with the customer. Research is the key.
6.6 Additional Practices and Tools
Remember, the longer it takes to collect payment due, the less the value of the payment (more effort to collect = less value of the payment). In collections, time is of the essence. Here are additional practices and tools that can aid in successful collection of accounts and should be considered by the team. These can be executed at the time of sale or when trying to collect past due amounts. Phone calls are your best option, followed by email or letter confirming conversation and promises to pay. Be prepared to offer payment options such as: { Accepting payment on a credit card; { Installment payments, especially with B2C customers
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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