Debt Collection, 60 days – 90 days – 120 days and --- over?

Few people like to do it, but asking for money forms an integral part of running any business. If you want your company to get the money, you're going to have chase it. Even though business may be booming, doesn't mean the company's bank account is too. While adding clients, increasing billing and cranking out top-quality work may seem like the formula for success, unless you can convert your accounts receivable into cold, hard cash; your company's bank account will be empty.

The most successful company's strive to treat their customers with respect and, in this process develop a personalized relationship that makes them feel valued. In other words, basing your business philosophy on "Customer Relationship Management" has been proven to produce sound results. The same philosophy should then be applied to successful debt collection, where you encourage customers to pay their outstanding debts without damaging your customer relations.

As with everything in life, there are effective and ineffective methods of debt collection. Collecting debt over the telephone is one of the most commonly and efficiently used methods of debt collection. Telephone communication is vital to debt collection efforts because of its typically faster resolution outcomes. The telephone is the best way of communicating with a debtor as a telephone call can clear up all the issues through a detailed discussion, resulting in well-organised debt collection.

In order to be an effective debt collector, you need to understand the cornerstones of debt collection. These being: communication, relationship building, technical skills and persistence. When you communicate with debtors over the telephone, your customers cannot see you, only the tone of your voice and your words create an impression. By using positive words in your language, you are conditioning the mindset and behaviour of your customer (without them realising it).

You should avoid using relaxed words, judgmental comments, direct alternatives and confusing jargon. Words like "I can't", "Sir", and "It's not our policy" are all red flags. Rather make use of power words, such as: "Yes", "Certainly", "I wil" and "Excellent". The way in which you communicate with your customers will directly affect your relationship with them. By using positive key words, you are making your customer feel comfortable and respected, both of which form the structure through service is delivered, and great customer service means great customer retention.

While maintaining good customer relations, you still need to collect the outstanding debt, and this can only be done through sound technical skills. Having the technical skills to handle any objection with an appropriate response could mean the difference between your company thriving or barely staying afloat. You should be able to put the customer on the spot by asking revealing questions without offending them as well as avoiding conflict; and this is where persistence comes in.

It has been said that "polite persistence precipitates payment" and this is very true for debt collection. You cannot merely say "give me my money" and expect your customer to not react in an aggressive manner. By being polite, customers will be willing to listen and explain their financial circumstances. Customers will gradually become aware of the need to process your invoice due to your polite persistence.

Customer service plays a central role in the success of telephone debt collection. When collecting outstanding monies from customers, you must remember that you are in fact, dealing with a business partner - where customer service goes hand in hand with a collector's duties. If you are finding that you are unable to settle your accounts on time because your customers are not paying you on time, then improving on your telephone skills and debt collection methods will greatly reduce the amount of outstanding debt.

If your company is not in line with a service approach, then it is time to move towards this direction.

Seminar warehouse offers a number of key finance topics essential for business owners and entrepreneurs including: