Rule #1: Don’t collect for today, collect for tomorrow.
Do we worry about what we have to collect today? Of course we do. However, let’s think about today as the result of work we did six months ago. Let’s say we have $100 to collect today. We have a name, a phone number and a legitimate reason to collect this $100. Is this phone call a collections call or is it another opportunity to connect with the debtor?
When you think of the future you no longer think collections. You no longer think ‘I need to get this $100 paid. I need to get a promise, an arrangement, a part payment etc’. What this call becomes is a relationship building exercise with the debtor that allows them the freedom to pay you $100 today, and then on time for the next six months (although you can substitute any time period here).
I remember working with a lady way back when I first starting collecting five year old NAB credit card debt. She had the best collections figures of anyone in the company, but she was never in competition with anyone. Many other collectors tried to reach the kind of successes she enjoyed, worked their ledgers harder, being more insistent on payment now, higher upfront good faith payments, shorter arrangements. But the harder they tried the greater the deficit.
I watched this dance for some time, wondering about the differences. I saw this lady come to work, happily say hello to everyone, sit down, pick up a phone and collect debt that was previously deemed uncollectable.
How did she do it? I asked myself that every day for weeks. On one occasion, I watched her sing 'Happy Birthday' to someone on the other end of the phone, talk about their family, their situation, ask how her husband was feeling and if her eldest son made the soccer team. It was only the second time she had spoken to this debtor. The result? Payment of the account in full. Yes it took two calls, but this was a live account and at the end she received a thank you and the bank kept the customer.
Thinking about it in psychological terms, what she did better than anyone else was remove the opponent and replace with a partner. She removed herself from the fight and became the support, the aid. The debtor was no longer paying a debt collector, no longer paying ‘the enemy’, but was working with a ‘friend’ to get back into terms. Working with a person as opposed to against a company.
It is a vast difference in thinking. I applied my own version of this ethos, using my own strengths of course. But the result was in fact the same. I started getting noticed for my increasing successes. I was promoted several times moving from old debt to current debt. I enjoyed hitting the bonus levels (and the cash that came with it helped the celebrations as well).
One of the things I employed was my ability to see at the conceptual level. That is, to read the debtor’s file and pick out pieces of information that gave me a sense of who the person was, an ability to get a picture of who I was dealing with. By the time I picked up the phone to speak to the debtor for the first time, I was already well down the road to building the relationship. I could ask directed questions, discuss topics that the debtor cares about, have a real conversation.
Having that real conversation brings into play all of the skills we learn about listening and empathy. I find it helpful to find something that makes me connect to the debtor, in a way that is real. This will comes across in the conversation and make the transition from adversary to supporter that much easier. This conversation type is not a today conversation, but building a relationship that will allow for collections in the future.
Most organisations have some form of credit, from a simple collect-out-of-terms-debt [MG1] to a full function credit department. In all environments, it is the collections ethos that will drive success and have the added benefit of creating a longer buying customer. It takes from the cure and gives to the prevention. It balances the effort.
The collections ethos feeds into the credit function being perceived as a profit centre and not the traditional cost centre. It is this ‘after sales service’ approach that changes the playing field. This prevention as opposed to cure. It can support the notion the credit department can be a source of competitive advantage through brand strengthening and adding value through supporting customer loyalty.
Don’t collect for today, collect for tomorrow.
*Paul Burgess BBusCom CPA FIML MICM
National Credit Manager
Steelforce Australia Pty Ltd