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100 Years and Counting

When it comes to credit and collections, technology has changed a great deal.  Customers that once submitted purchase orders by mail or phone or fax now do so via EDI. Creditors that used to mail out thousands of invoices a day now send invoices electronically that are then uploaded into their customers’ accounts payable systems without human involvement.

Some creditors are using deduction management software to better manage this common problem.  Credit managers use decision support software to make faster, more consistent and better credit decisions. Creditor companies have numerous options for communicating with their past due customers including instant messages, letters and faxes, e-mail, and automated dunning notices…. and the old standby the telephone collection call.

This is a situation where the more things change, the more they remain the same.
How so?   If you want to be more effective in your collection efforts, you need to reach out to past due accounts by telephone.  You cannot rely on any form of written correspondence to get the job done. Why?  Because in spite of the advances in technology, the most effective way to collect involves a two way dialogue with the debtor.  Any form of one- way communication such as an email, a FAX, an IM or a dunning notice is more likely to be deleted or ignored than acted upon.

As a former Accounts Payable Manager, if you want your collection efforts to be taken seriously, you need to call your past due accounts for payment status.  A call from a collector is harder for A/P to ignore or disregard. One way communication will never be as effective as a discussion with the customer in which collection issues are discussed and consensus is reached.  Don’t get me wrong!  Collection correspondence works, but it is more likely to work with financially sound customers that inadvertently overlooked paying an invoice.  Correspondence is unlikely to work with customers intent on holding on to your money for as long as possible, and is even less likely to be an effective collection tool when debtors are experiencing serious financial problems.

Michael Dennis, CBF

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.

4 Responses to “The Telephone; 100 Years Old but Still Relevant – Michael Dennis, CBF”

  1. DMarc says:

    It IS really nice to have a variety of communication techniques that can save valuable staff time. Email, IM, fax and voicemail are all passive modes that are effective for passing along information quickly. I’m also okay with our collectors using those push methods as reminders for small or overlooked items but so far it’s only mildly successful. For larger $$$ or items that continue to be “overlooked”, I still require my collectors to pick up the phone because that’s still the most effective collection technique for us. I think as more payables people retire, then the method will continue to shift.

  2. Deanette Rosalli says:

    I agree! It is amazing at how much can be accomplished just by making one phone call! Problems are solved faster when you are having a two way conversation.
    Plus it is the reason I chose credit over accounting. I get to connect with the people! 🙂
    Thanks again for reminding everyone to use our old friend the telephone! LOL!
    Take care,
    Deanette

  3. Long term business relationships are “Relationships”. Voice contact is a big step above sending an email or letter to get a response. A periodic face to face visit is invaluable.
    First, it establishes the perception that you play a valuable role in the business relationship. Both the Customer and Sales will take note. It also provides you insights about the Customer, you can not get remotely. Most of all it provides an opportunity to establish personal relationships that separate you from others who are only signiture lines on an email or voices on the phone. The payback is well worth any expense and time.

  4. Guy Nishida says:

    Dennis,

    One of your thoughts was “…the more things change, the more they remain the same.” Sometimes technology can cause a regression, which is less than remaining the same.

    Until technology can create symbols to identify gestures, tell-tale signs of obfuscation, hesitation in speech, voice inflections, the lack of eye contact and the myriad of other communication markers that we use to measure potential payment outcomes, email, text, et al are actually steps backwards.

    Recently, I asked the Community whether their companies had a program in place whereby the credit personnel actually traveled to their clients’ facilities to meet face-to-face. The hypothesis was that a debtor will pay someone they have met before an anonymous creditor. The replies suggested that this stategy was shared by others. One level down from this technique is your phone call. By establishing a relationship with a debtor via voice contact where there is hopfully some small talk and a building of a personal relationship, that voice collector should likely get paid before the 3rd tier collector – – the collector who uses only written communication.

    While written communication has its value in documenting understandings and prior contact, a customer can nevertheless easily claim non-receipt or the loss of the email in cyberspace or junk mail. So too, letters and text. In fact, I would argue that debtors expect the written communication first which they will toss, expecting that when the collector is truly serious, a phone call followed by a final demand is what will trigger their response. Feigning forgetfulness to someone with whom they had a lengthy conversation is not as easily accomplished.

    I often find that when I receive texts or emails, they are routinely followed by corrections, amendments, and additions. I conclude that this is because in this age of rapid-fire messaging, we type before as we compose and never review or outline what it is we truly want to convey, in a complete and coherent format. From this perspective, we communicate quickly, but not always more efficiently or effectively.

    Long live the phone, but barring that, long live employers who will authorize the expenses for face-to-face meetings on a golf course.

    Guy Nishida

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