Tips, Tricks and Techniques

In previous posts in the series, we’ve discussed the importance of using the right tools, scheduling the calls, documenting results, and generally how to systematize this process. Now, let’s talk technique.

Effective collection calls blend preparation, strong communication skills, empathy, and persistence. By focusing on solutions and maintaining professionalism, you can recover overdue payments while preserving your valuable customer relationships.

• Remember, this is accounts receivable, NOT bad debt! These are our customers we’re talking about. When they owe us money, it’s actually a good thing—it means they’ve made a purchase! Late payments are just part of the routine for many businesses, big and small. Be courteous, be professional, and whenever possible, be friendly.
• Do the work! It’s easy to find something else to do, but making your collection calls regularly will improve your cash flow and reduce your bad debt losses. It’s the single most effective way to ensure timely payment and avoid bad debt losses.
• Be Prepared: Before calling or sending an email, review the customer’s open invoices, payment history, and any previous communications. Be prepared to provide an invoice number, purchase order number, and the invoice date. Your preparation will enable you to address the situation accurately and avoid miscommunication.

Use a Structured Approach

Deciding Who to Contact

Your objective is to consistently contact every customer with an outstanding balance that falls outside the parameters set in your collection policy, ensuring timely follow-up until the balance is current.

You may be tempted to focus only on the 20% or so of your customers with the highest-value invoices. This is a mistake. You’ve probably been in contact with these customers all along and may have even given many of them special terms. You need to contact the remaining 80% to get the outstanding results we’re looking for.

10 Good Reasons to Start with an Email Instead of a Call

Starting with an email allows you to initiate the collection process in a professional, efficient, and customer-friendly manner. It provides a foundation for further communication if needed while allowing customers to respond and potentially resolve the issue without time-consuming phone calls. Here are ten good reasons to start with email.

1. It’s Less Intrusive: Emails allow you to make initial contact without interrupting the customer’s day, allowing them to reply at a good time for them.
2. Customer Convenience: Emails enable customers to respond at their convenience, giving them the time to gather necessary information or consult with their accounting department.
3. Customer preference: Many customers prefer email communication for business matters, especially for initial contacts regarding payments. By prioritizing the customer’s convenience and preferences, you foster a respectful and positive customer relationship that can enhance long-term loyalty.
4. Documentation: Emails provide a written record of your communication, which can be useful for tracking purposes and potential future disputes.
5. Efficiency: Emails are faster than calls. You can use templates to avoid repetitive typing and to ensure consistency. I use Text Expander and Outlook email templates for this. You can also reach multiple customers quickly by sending batch emails.
6. Attachments: You can easily include relevant documents like invoices or statements, enhancing efficiency even more.
7. Time Zone Considerations: Emails can be sent and received regardless of time zone differences, which is particularly useful for businesses with international clients. With Outlook, you can schedule your emails to be sent at times when your customers are most likely to see them.
8. Professionalism: A well-crafted email maintains a professional tone and lets you word your message carefully.
9. Cost-effective: Sending emails is generally less expensive than making phone calls or sending physical mail.
10. Saves Time: Sending emails will ultimately reduce the number of collection calls you’ll need to make.

What If My Customer Does Not Reply?

The number of customers who respond to your first email will vary based on factors like your industry, your relationship with the customer, and other variables. Not everyone will reply, and that’s okay. Here’s what to do next:

Send a second request: Resend your original email but add “2nd Request” to the subject line, followed by your company name and the purpose of the email. This small change is highly effective and easy to implement. Attach the invoice again and resend. For example;

Sample Subject Line – 2nd Request (Your Company Name) Open Invoice Inquiry (invoice number). Again, I use Text Expander for this, so I don’t have to write the same thing repeatedly.

Third attempt – pick up the phone: If they still haven’t responded after your second attempt, it’s time to call them. We discuss how to make an effective collection call next.

Other Collection Strategies

Everything we’ve covered so far has been designed to promote a proactive approach to preventing delinquent accounts. Now, let’s shift our focus to other ar collection strategies, specifically the collection call. Here’s a great video from a collector who’s heard it all.

A Couple of Best Practices

Start with accounts payable; it’s more respectful than going straight to the controller, president, or owner and, honestly, is more effective. It also allows you to build rapport and gain insights into your customer’s payment processes. If you face resistance, you can escalate your inquiry to other finance managers or executives. Starting lower on the ladder provides more avenues for follow-up if escalation becomes necessary.

Maintain a professional tone, but don’t overdo it. It’s easy to cross the line between professional and officious. Remember, these are still your customers, and you want them to return. A stiff, overly formal tone can be off-putting.

Be friendly, but avoid personal details—oversharing can blur the boundaries. The last thing you want to hear in a collection scenario is, “You know my situation”.

Opening the Call

Start the conversation with a clear and direct introduction, especially if this is your first call. If you’ve already established a relationship with someone in the AP department, this might be a little too formal, but these two collection call scripts will work for opening most of your calls.

State your full name and company name, and clearly explain the purpose of the call. For example: “Hello, this is [Your Name] from [Your Company]. I’m trying to check payment status on an outstanding invoice I’m showing here. May I give you the invoice number?” Or;

“Hello, this is [Your Name] from [Your Company]. I’m trying to check payment status on what looks like an open invoice going back to (insert date or month here). I sent you an email with a copy of it last week. Did you happen to see that?

Conducting the Conversation

During the call, follow these best practices:

• Be empathetic yet assertive: Show understanding of the customer’s situation while maintaining a goal-oriented approach.
• Practice active listening: Allow customers to share their concerns and validate them to create a cooperative atmosphere.
• Ask for payment: Directly request payment during the call or secure a firm commitment on a payment date. There is nowhere on your calendar for “as soon as I can”.
• Address issues directly: Be prepared to discuss any problems the customer may have with the invoice and offer solutions or adjustments as necessary.
• Avoid threatening or abusive language; it doesn’t work.
• Offer payment options: If appropriate, provide information on various payment methods such as credit card, ACH, or wire transfer.
• Offer payment plans: A partial payment is better than no payment. You’ve reduced the amount owed, which is good for both you and the customer and strengthens the customer’s commitment to pay. It signals intent on their part and demonstrates their willingness to settle the balance.

After the call, follow these best practices:

Document the conversation, including the following details:

• The day and time of your call.
• The number you dialed (I start my notes with the last four digits of the number I dialed; it can be helpful if you have trouble reaching your contact later).
• The name of the person you spoke with.
• Key points discussed, especially the date they plan to send the payment. If they couldn’t or wouldn’t commit to a payment date, note when they expect to be able to do so. Remember, but don’t say there is no place on your calendar for “as soon as I can”.
• Promptly send any requested documents, such as invoice copies, statements, or proof of delivery. Even if the documentation has been sent before, resist the urge to point that out—it can come across as argumentative and counterproductive.
• Schedule a follow-up call. The scheduled date should be based on your conversation. If you need more information on how to schedule calls for maximum effectiveness, we discuss it at length here.

What to Do When You Don’t Reach Your Contact 

In collections, only about 30% of your calls will result in live contact with the person you need to reach. The rest will involve leaving a message, either in voicemail or with a receptionist. Here’s how to make those messages effective:

• Identify Yourself and Your Company: Start by clearly stating your name and the company you’re calling from.
• State the Purpose of Your Call: Be direct but friendly about why you’re calling.
• Provide Invoice Details: If appropriate, mention one or two invoice numbers and dates. Avoid listing too many details.
• Leave Your Contact Information: Always include your phone number and extension, even if you’ve called before. Don’t assume the customer remembers your previous calls or recognizes your voice.
• Speak Clearly: Leave your information slowly and clearly. It’s crucial to ensure they can jot down the details without confusion.
• Add a Call-to-Action: Include a polite prompt for a return call, such as, “Please give me a call back; my number is (your phone number with extension)

Avoid the temptation to hang up without leaving a message. Leaving a clear, concise message increases the chances of getting a response and maintaining a professional image. Daily calls or multiple calls in a day are annoying and generally ineffective. Between two and seven days between calls is generally acceptable.

Handling Problem Customers

Problem customers come in many forms. They may be touchy, difficult, defensive, irate, argumentative, obtuse, or evasive. As a collections professional, you need to be able to deal with all of it without becoming defensive or argumentative yourself.

The Touchy, Difficult or Defensive Customer

It’s difficult, but don’t respond in kind. Stay calm and professional, even if the customer becomes confrontational. Listen actively to their concerns, showing empathy and understanding. Acknowledge their feelings without agreeing to any inaccuracies they might express. This approach can help de-escalate the situation and build rapport, making guiding the conversation toward a resolution easier. Remember, maintaining your composure can prevent the situation from escalating and allows you to remain in control of the discussion.

The Irate and Argumentative or Defensive Customer

As a collections professional, you will inevitably encounter angry customers. It’s important to approach these collection calls with patience and professionalism. Understand that their frustration may stem from various sources, such as misunderstandings, financial stress, or unresolved issues. (Meaning they may not have the money).

Start by listening carefully to their concerns without interrupting. This helps you gather valuable information and demonstrates empathy and a willingness to help. Remain calm and composed, and avoid taking their anger personally. Instead, focus on finding a constructive solution. By staying respectful and solution-oriented, you can turn a potentially negative interaction into an opportunity to build trust and resolve the issue amicably.

The Evasive or Obtuse Customer

The evasive customer refuses to give you a straight answer or avoids your calls altogether, while the obtuse customer takes your calls and gives the appearance of being cooperative but refuses to understand or repeatedly changes the subject. Both are very frustrating to deal with. Here are some tips for dealing with them.

How to Recognize the Evasive Customer

Often, you won’t get a clear answer the first time you contact a customer. This can sometimes lead to overly aggressive collection tactics, but it’s important to remember that customers may need time to verify invoices, obtain approvals, or gather necessary paperwork.

However, once you’ve requested payment status, it’s the accounts payable department’s responsibility to provide it. If they can’t immediately answer, they should be able to tell you when they will be able to give you an answer. If they refuse to do either, you’re likely dealing with an evasive customer and may need to adjust your approach.

• Rule #1: Don’t Give Up! It might seem like you’re not making progress after several calls, but that doesn’t mean you should abandon the process. Persistence pays. Refer to your internal collection policy for guidance. A well-written policy will outline the steps to take and how long to wait before escalating the matter.
• Rule #2: Use All Available Tools. Don’t rely solely on leaving multiple messages—try other methods to get a response. Send an email, fax, or letter, or use all of them in sequence. If you’re not getting results, escalate as needed. Reach out to the Accounts Payable Manager or Controller. If that doesn’t work, try contacting the Purchasing Department, as they are often invested in maintaining the supplier relationship and may help facilitate payment. Additionally, don’t hesitate to involve colleagues within your own company. Sales teams, in particular, are usually invested in preserving the customer relationship and can assist in resolving payment issues.
• Rule # 3 (and shameless pitch): Don’t wait too long before seeking outside assistance. Third-party collection letters work. With our bad debt collection letter campaigns, you get the impact of a traditional collection agency without the high agency commissions. Seriously though, waiting too long to get help is often a costly mistake. If you’ve done everything you’re supposed to do and are still getting nowhere, reach out to a reputable collection agency (ideally ours) and remember that 50% of something is better than 100% of nothing.

How to Handle Disputing Customers

Disputes happen. Most often, your customer has a legitimate complaint, and you should handle the call accordingly. However, occasionally, the dispute comes well after repeated requests for payment. That kind of dispute presents a collection challenge and is more likely to end with a debt collection agency. Here are some tips on how to handle legitimate disputes.

1. Listen Actively: Give the customer your full attention, and let them express their concerns without interruption (even when you think they are wrong).
2. Document the Complaint: Take detailed notes of the customer’s issue. Include specific details, dates, and relevant information. Example: “On September 15th, the product arrived damaged.”
3. Confirm Your Understanding: Summarize the complaint back to the customer. Ask if you’ve captured their concerns correctly. Make any necessary adjustments to your notes. Example: “So, if I understand correctly, your shipment arrived late, and some items were missing?”
4. Propose a Solution: Outline the steps you’ll take to address the issue. If necessary, involve a manager or another department. – Provide a clear timeline for resolution. Example: “We’ll replace the items at no charge, and you should receive them within three business days.”
5. Take Immediate Action: Follow through on your promises promptly. Keep the customer in the loop with updates. Example: “I’ve already notified our shipping team, and they’ll confirm your replacement order soon.”
6. Follow Up Consistently: Set reminders to follow up on the complaint. Reach out to the customer within a reasonable timeframe. Consider the customer’s expectations when determining the follow-up frequency.
7. Maintain Ownership: Even if you’ve escalated the issue, stay involved. Coordinate with colleagues handling the complaint. Ensure all promises made to the customer are kept. Tip: Taking ownership means you remain the point of contact, even if others are helping resolve the issue.
8. Be Proactive in Problem-Solving: Take initiative to find solutions within your authority. Suggest alternatives if the initial solution isn’t feasible.
9. Ensure Resolution: Ensure the issue is fully resolved to the customer’s satisfaction. Ask for feedback on how the situation was handled. Example: “Was everything resolved to your satisfaction? Is there anything else we can do for you?”

Once the dispute is resolved, it’s back to collection mode, but the transition can be tricky. Here is a sample script; please feel free to use it. “We appreciate your working with us; I’m glad we resolved the issue. Can you give me an idea of when you can schedule payment of the invoice”?

Summary

Whew! We’ve covered the key aspects of accounts receivable collections in this article. Please comment below and let me know if we’ve been helpful. For more insights, feel free to explore our Collection Prevention Blog [here]. If you have any questions, need further details on any of the topics discussed, think we’ve missed something, or need help with your accounts receivable or bad debt collections, don’t hesitate to reach out to Vienna at 800-201-CA$H (2274) ext. 110.

Previous Articles in this Series

• Bad Debt Prevention Part 1
• Bad Debt Prevention Part 2
• Bad Debt Prevention Part 3
• Bad Debt Prevention Part 4
• Bad Debt Prevention Part 5
• Bad Debt Prevention Part 6