Negotiation Tips for Working with your Debtors…

As Collection calls progress and your receivables age, it can be difficult to remember that at the heart of your interaction with your debtor, lies the fact that you are, by definition, negotiating with them.

Though it can be a hard pill, especially when your company is clearly and rightfully owed the money, understanding that the process is one of negotiation can make achieving your desired outcome a much less stressful task.

Here are a few tips that can encourage constructive dialogue…

Give your debtor a voice. Giving your debtor time to talk can set the conversation off to a positive start and important information can be revealed that can be used to help settle the debt.

Listen. By hearing what your debtor is saying you are more likely to pick up subtleties that will help your collection.

Show that you are listening. By encouraging the debtor to go on through verbal cues such as ‘go on’ and ‘I hear you’, you might get deeper into the real reasons for resistance to payment. Debtors will often be defensive and some patience on your behalf might lead to meaningful facts being shared as to the real situation.

Make sure the debtor is finished talking before pursuing your agenda for the conversation. Breaking into the conversation with your questions or concerns can stop the flow of information and create resistance. The more information you can get, the more effective your side of the conversation will be.

Reserve your Judgment. Letting your debtor know that you are genuinely interested in his situation creates an environment that leads to goodwill. Most debtors know that they should pay their debt and your lack of criticism can encourage them to want to work with you. Sometimes the issue may be a miscommunication that needs to be rectified.

Start with an Ask, not Tell approach. Debtors generally understand that they will have to make payment arrangements. By asking how they believe the problem can be resolved you can get a good start on achieving a workable plan. Once they give their suggestions you have information that can help you to adapt their suggestions to fit your company’s needs more quickly.

Once you have your debtor on the phone, these suggestions can help create an environment where you are most likely to get the results your company needs.

Having trouble getting the conversation started?

That’s where Schel really shines…

Our 3rd party approach, early in the A/R process gets your debtors calling YOU, before the file ages too long and your debtor becomes more difficult to reach or even goes out of business.

Our system is often over 95% successful, with costs of less than 5% for ALL collections, including litigated files, when used as recommended.

Always feel free to contact me if you have questions regarding any aspect of your receivables- if I can’t help you, I’ll find someone who can.

Here’s to longer days and another month closer to springtime.

(thanks to hahastop.com for the awesome jpeg)

Making Hay While the Sun Shines…

Spring and Summer is the high season in many industries. During that period, businesses brace themselves for the administrative and operational challenges that go with making the most of their year’s most potentially profitable months.

Unfortunately, it’s at the end of the high season that we see many Accounts Receivable issues that arose because of the change of focus. There are some easy ways to decrease the occurrences of delinquent debt that pop up as the nights grow longer…

- Do your best to ensure your credit applications are being filled out properly– A signed credit application can ensure that you will receive your interest on late payment if you ever need to enforce the debt and that, if your customer becomes hard to reach, you have the information that gives you the best chance of finding them.

REMEMBER!! Regardless of what interest rate you put on your invoices, without a signed agreement you are only entitled to the Provincial Judgment Interest Rate, which was only 0.85% in 2010 and 1.85% in 2011- per an um. Compare that to the 12% you’d receive with the Schel Credit Application (not to mention our unique indemnity clause), and you’ll quickly see that your costs of collection can be seriously offset with this simple precaution!

- Photocopy customer cheques when you can! — a quick photocopy of your customer’s cheque can take some of the headache out of enforcement, should the need arise! Valuable bank information that can be used for garnishees will be at your fingertips.

- Follow up verbal payment arrangements with an email, preferably with ‘read receipt’– any acknowledgement of the debt by your customer within the first 2 years can be used to extend your statute of limitations. Save these emails.

- Make use of Schel’s Receivable Management tools!!– during your busy season, Schel’s courtesy letters, demand letters, and administrative assistance can keep your A/R’s from slipping through the cracks.

After your customer fails to respond to your efforts to communicate regarding their account two times, the likelihood success decreases EXPONENTIALLY! A well timed, polite reminder from Schel or our lawyer’s demand letter can quickly move your invoice to the top of the pile, which is where we are proud to keep our clients.

Our system is often over 95% successful, with costs of less than 5% for ALL collections, including litigated files, when used as recommended.

Combine that with the hours previously spent trying to chase down unreceptive customers and the cost of having your cash flow interrupted, and you’ll find that using Schel can be almost like making money! ; )

Community Building, Collections and the Phone Company?

I was just reading a post by Rangersf that really resonated with me.

It was explaining that the best way to decrease or minimize your B2B aged receivables is by developing relationships with your client and engaging in multiple points of contact with those people in charge of accounts that are starting to age beyond your comfort.

I found this interesting because here we find yet another advantage to community building in an area that is often fraught with polarization and disputes — your Accounts Receivable.

When Schel was started it was because of a clear need for support for companies in their collections before the standard implementation of a third party (which is often only when the account was considered ‘beyond hope’).  We gave our clients access to professional and legal support before the account became ‘a dead horse’.

We’ve seen good success in helping our clients reduce their write-offs and the need to litigate. We work with our clients on earlier stages  in the A/R process and I’ve had occasion to notice that inconsistent (or minimal) customer relations seem to hallmark the clients who come to us with the most pervasive collection issues.

A great thing that can be seen in consumer, business and pop culture in general,  is a backlash to the unrelenting focus that has been placed on efficiency and bottom line, to the exclusion of the most important element of business– people and how they like to be treated; what creates a connection and as a result, a lasting impression.

I love that we are living in a corporate culture where this kind of talk is becoming so common that it’s almost trite. It means that our lexicon is changing. Thank you TED, thank you Seth Godin, and thank you social networking… incidentally, the growth in farmer’s markets could be a good indicator of this movement toward the prioritizing of community on a consumer level.

Online, despite the excess of spammy self-serving self-promotion we see on the net, genuine dialogue and generous sharing of knowledge is the benchmark for worthwhile cyberspace… even marketers like me know this, which is the coolest part- the game has changed and unless you’re bringing something of value to people- even just sincerity and honest dialogue- don’t even bother. Twitter, another example of the shift toward personal contact.

I believe values that were prevalent in times when the world was smaller and we were more dependent on each other are coming to the foreground again in what we demand from our business relationships as well as consumer relations. The pendulum swings. An example of what might be causing this pervasive shift can be found in what has become an icon of corporate disdain for their customer base–  Telephone service providers. Service has gotten so cut-throat and impersonal that customer loyalty in this area is extremely hard to come by….I know this because I recently switched providers and the feedback to my inquiries about who I should switch to was unanimous– they all suck.

This article discusses bad debt in North American Telecom, and interestingly, the one company who has seen improvement did so, in part, by combining their Accounts Receivable department with their Customer Care.

It’s much easier to dismiss a debt owed to a faceless conglomerate who treats you as a number- whose huge profits are never shown to give anything back to its customer base except the reduction of  human staff and longer wait times… there are those who might even feel justified in forgetting their debt when finally leaving such a company. Not advisable of course, but I wonder what the bottom line in such a scenario might look if the focus was overtly and indisputably on service, client retention and appreciation– I wonder what effect it might have on their Accounts Receivable and bad debt ratio… not to mention new client acquisition and general growth. This is the type of paradigm shifting that Seth Godin likes to talk about and that I love to read about.

So Rangersf’s post about reducing your A/R problems by keeping in touch with your customers really rang true for me– there is no area that will not be positively affected by such a practice. Client care and the health of your receivable department have time and again proved to go hand in hand.

What moves it into the next level is client contact that goes beyond the realm of necessary business communication that’s oriented to a specific goal- even client care calls often have an objective beyond simple appreciation for the client. Getting to know the people that we do business with.

Community & Collections? Know your clients!

Community & Collections? Know your clients! show appreciation through events & contact & decrease the likelihood delinquencies! Neat, huh?

Hello!

My name is Sherry. I work with a company called Schel Management Credit. This is a company that my father started in the late seventies- back then it was called Omega Commercial Investigators. Back then, we focused on helping our clients recover what they could from debtors who had gone delinquent (actually I helped vacuum the office for my allowance back then- but that helped the staff with skip tracing and enforcement- it did, it did!).

Over the course of a few years dad noticed that in way too many instances our clients were spending time and money trying to collect a fraction of a debt that should never have gone bad in the first place…

Of course no debt *should* go bad, but these were situations where, if our client had tried a few fairly simple things earlier in the process, the problem wouldn’t have become a problem.

As a kid, I wasn’t exactly sure what my dad did. I did know, though, that it was NOT a collection agency. Dad was emphatic about that. It was accounts receivable management. Now that phrase is attached to virtually all collection agencies. Back then not so much. The point was, though, that there were some very basic differences between the system my dad developed and what was generally available to companies who needed help collecting a receivable.

Thirty three years later, it turns out that there are still some basic key differences between what Schel provides to our clients and what is generally available. Mainly, we are here to help our clients avoid the issues in the first place… also our fee structure is wildly different from most companies in this sector of business. Over the course of this blog I’ll touch on some of the differences in the context of various situations common to clients who run receivables. For now if you’d like more information, simply click our website link. Or contact me!! Yes! That is a lovely way to find out more- I’d love to meet the people who end up reading this!

Ultimately, though, this blog is, as most blogs are, a way for me to find out more about the community online who are interested in this stuff, and most importantly, to learn about other viewpoints, issues, commonalities and differences in approaches. We, probably like you, simply want to be the best we can be and we’re hoping with feedback and in getting to know this community, we can do that.

Anyway, thanks for checking this out, and I look forward to getting to know you!

The

Hello world!

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!