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’ 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.