The Sales Approach to Collecting

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Upon a recent visit to a client, I had the opportunity to talk with an employee who spoke excitedly about just how much she loved her job. "I get to spend all day on the phone talking with my friends around the country, and my boss pays me to do it!" she reported.

What does she do? She is a collector in the credit department. Her friends are the customers she calls for payment. I visited her office and saw her bulletin board--completely covered with snapshots of children--all the way from infants to teenagers. Who were they? You guessed it. The offspring of her friends--the company's customers.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006.

Collections is a sales function, not a financial function. In the 1970s, with a strong background in sales, I began working for a collection agency. I was one of four collectors. One of the collectors, a veteran, had it arranged so that he received 50% of all the new accounts to work. The other 50% of the accounts were spread out among the three of us other collectors. Within the first month, I was collecting more than the veteran. How? I utilized my sales background.

Here are some ways to open a collections call using the sales approach:

"You're one of my best customers, and I want to keep it that way. Also, we want to be able to give you a good rating if other companies call for credit references on you."
"We assess 1.5% monthly--18% APR--late charge. However, if you're willing to pay right away--at 40 days--we'll waive the late charge."

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And get to know the accounts payable employees. Learn their names, and call them by their names. Learn all you can about their families and their lives. Note birthdays and anniversaries. Then send cards. If you find out they're in the hospital, send flowers. When they return from vacation, call to see how they enjoyed it. Taking this personal approach moves you right to the top of the payables list.

Also, put a mirror in front of your face when you're talking to customers on the phone. Smile. It will come across in your conversation.

Hiring Collectors
When you hire collectors, do it over the phone. After all, if they don't impress you on the phone, they won't impress your customers when they spend their days talking to them on the phone.

Consider hiring salespeople to fill collector jobs, rather than people with financial and accounting backgrounds. In one company, I talked an inside salesperson into making collection calls. My pitch to him: "You'll love this. It's like shooting fish in a barrel. You're telemarketing to a captive audience. They owe us money, so they have to talk to you. Every call is a hit! You also have the opportunity to negotiate with them." Within the first week, he resolved over $200,000 in delinquent receivables and loved every minute of it.

Two additional sales/collecting tips:

Follow the 80/20 rule, just like salespeople do. Focus your attention on the 20% of the largest accounts that owe you 80% of the money. Don't call alphabetically. You'll never get to the end of the alphabet.
Call right away, and call often. Don't be afraid to get on the phone. Collections doesn't have to be confrontational.

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by Credit Today in 2006. This article originally appeared prior to 2000.