There is an old expression that you can attract more bees with honey than with vinegar.
Does this relate to business to business debt collection? Will a friendly approach to debt collection result in a faster payment than a more direct approach in which the collector is “all business.” Honestly, I don’t have any statistics about this. However, long ago I managed an accounts payable department. One way that we dealt with suppliers was to prioritize payments based on our interactions with the creditor company. For example, if a creditor company sent an email or fax with a friendly inquiry about the status of payment, it was usually ignored — unless the creditor was one of the ten or so key vendors identified by management to A/P.
In addition, if the collector simply asked for the status of payment, our standard response was that payment of the past due balance would be made in 14 days. If the collector pushed harder by stating that payment proposal was unacceptable and that our account could or would go onto shipment hold, we would then negotiate in good faith.
An interesting aside: We did a study of how many creditors did not complain when we told them they would have to wait an additional 14 days before their past due balance was scheduled for payment, and found that on average about 70% of suppliers accepted this offer without protest.
The lesson here is to become one of the 30% that pushes back when debtors try to delay payment.
This brings us full circle to the original question: Honey or vinegar? In my opinion and based only on my opinions and personal experience, the creditors that are more assertive and less accommodating will get paid sooner. So, nice guys don’t always finish last, but they might get paid last in B2B collections.
What are your thoughts?
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.