Called And Left Message (x7) – Michael Dennis, CBF

Voice Mail

On one consulting assignment, I was asked to help the collection team become more efficient in debt collection.  Following introductions, I wandered from collector to collector and what I found were collectors dialing for dollars rather than using a well thought out strategy for prioritizing calls and having quality discussions with delinquent customers.  For example, when the person they wanted to speak to was out or unavailable, they simply left a message. As a result, one collector had left seven (7) messages over a period of two weeks for the same A/P contact inquiring about payment status.  Another collector was calling for the first time about a large balance already 21 days past due.  These were not isolated incidents. They happened frequently enough that I was able to identify areas to improve within the first hour.

For the collector that left 7 messages, it seemed obvious that A/P had no intention of returning his calls.  My solution:  Leave two messages for someone and if they do not respond, make no more calls to them.  It works this way:  Leave two messages for the A/P clerk, followed by two for the A/P Manager or Controller, followed by two to the CFO, and then on to the company President or business owner.

Another collector ignored a large past due balance for 21 days. When he finally called for payment, he accepted the first offer made by the customer.  Why?  In my opinion, he was poorly trained.  My solution:  Train collectors so they understand that their role is as negotiators, not note takers.  Their goal is to negotiate for the fastest possible payment.  While the volume of collection calls is important, the quality of interactions with debtors is more important.  Using this situation as an example, I suggested this approach:

“As you know, your account has a past due balance of $xx,xxx and that amount is already 21 days past due.  I am not going to be able to convince management that waiting an additional 10 days for payment is a good idea or a good deal.  Who do I need to speak to in order to discuss a more realistic payment commitment?”

An easy way to explain this concept to collectors is to remind them that Accounts Payable’s first offer is always their worst offer.  Dialing for dollars is effective when you are calling the right accounts at the right time. Properly trained collectors quickly move beyond note taking and negotiate confidently with their customers for the fastest payment possible.

Michael Dennis, CBF

What about you?  Do you have any horror stories or success stories you would like to share about your collection efforts?

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

13 Replies to “Called And Left Message (x7) – Michael Dennis, CBF”

  1. I read this blog with great interest. Are you really going to call the CEO, President, or business owner.

    Many creditor companies consider this type of collection to be unacceptable.

    Comments?

    Thanks

    Michael Zininberg

    1. I agree, if you are calling the CFO or Owner I think you are probably at the point of closing the account or litigation.

      1. I don’t look at calling the CFO or CEO/President as negative. When I escalate the situation, I do so in an effort to SAVE the account, not in an effort to lose or close it. I have achieved my goal of full payment many times. It doesn’t always work, but it is worth a try. When calling the President or CFO, I am always apologetic for having to involve them, but explain that we feel the situation is serious enough to have done so. Any President or CFO should take such a call very seriously and get something done.

        Sometimes, creditors aren’t paid timely simply because someone isn’t doing their job. Business to business credit is everything to a company. You may just be doing the President or Owner a favor!

        Kelby

  2. I really enjoyed reading these, its that’s my moto too, not just to leave a message, but to try get better info as to who, when and where to best reach them. I have most of my account with specailzed in my outlook who and when to call them, or reminder email etc. and followups. Stay on top of them. You rule.

    Time is money…

    thank you!

  3. Hi Michael! We certainly have a well defined escalation policy and I do indeed contact the CEO, CFO etc. Believe me, while retraining the customer that you as a creditor take their debt seriously, the AP clerk will flag you as a vendor that doesn’t mess around. I usually try to leave the clerk or super some wiggle room by phrasing my inquiry to the CFO (I’ve left several msgs for so & so, I don’t know if they are out for an extended time as I haven’t received a response, but I do feel that our relationship with your account is important enough to reach out to you before we need to place a hold on your purchasing privilege.) It lets them all “save face” and you are now a creditor they know is serious about the debt.

  4. Michael Z – It is inappropriate for a A/P clerk to refuse to return calls: we should be called before the delinquency, for permission to extend terms. So if he/she is on vacation, the only way I can find out is to kick it up a notch until we get answers to our questions. I’m accountable to get results, regardless of who I have to talk to.
    As long as I’m observing the debtor company’s chain of command, I never have a problem with my customers in going up the ladder. If the debtor company is not a regualr problem child, I find that most A/P Managers or CFOs are VERY interested to find out they are missing discounts. I had one particular company’s owner ask me to call him personally the next time his company misses a discount. It’s all perspective: I’m looking at delayed cash-flow and he’s looking at lost profit. There can be great value in getting an officer involved when appropriate.

  5. Deb hit the nail on the head. Have a defined escalation policy and basic script for the collectors and allow the customer to “save face” but also have defined consequences. We also have internal escalation from Collector to Supervisor or Manager as needed. I’ve shared this before but we rewrote our aging reports to break out 1-15 & 16-30 and can boast 98% of our receivables are under 30 days. To get to this point, we know a number of CFO’s and owners on a first name basis.

  6. Thank you for your comments, and in particular those about softening the blow. By the time I am at the Controller or CFO level, there is usually a screener in place… such as the CFO’s Administrative Assistant. When I tell them the story, I almost never hear from the CFO. Instead, I usually get a call from the AP Manager or even the AP Clerk.

    And I certainly agree with giving senior management an out. My conversations or messages go along these lines: Unfortunately, I have not been able to reach Amy, Bill, or Carol despite leaving several voice mail messages for each of them. I asked to speak to you because I was running out of ideas and I need to know when the past due balance of $xx,xxx was or will be paid.

    Thanks again for your responses!

  7. Not to be self serving, but a major benefit of attending your industry credit group meeting is the ability to ask others in the group selling the account for a better contact then the A/P clerk for payment. Often, they only pay the invoices that the person controlling the $$ authorizes. One phone call to a/p person should indicate whether they have the authority to release funds.

    The purpose of the group is the exchange of information. What better information then who ultimately can pay the bill

  8. Larry is absolutely right. Active membership in an industry credit group will give you access to information about payment patterns of customers and applicants. Personal relationships will make it easier to gather factual, historical information from other credit group members about problem accounts and prospective customers.

    MCD

  9. I see no issue whatsoever in contacting a President or CFO. I have done it numerous times in my career and I have never regretted making that call. Sometimes you need to contact a decision maker in order to get resolution.

Leave a Reply

Your email address will not be published. Required fields are marked *