"If you have a lot of late accounts, it's often because customers are dissatisfied," explains Chandran Rajaratnam, Chairman and CEO of Gestetner Corporation (Greenwich, Connecticut). "Until you get to the root of their dissatisfaction, you will always have problems collecting."

When customers run delinquent, collectors (who Rajaratnam refers to as "first customer satisfaction interface" specialists) don't bring out the big guns and start threatening customers. Rather, they assume that a problem exists, and they try to get to the root of it.

A typical conversation might go like this:

Is everything OK? How is your system operating? Did the sales rep do what he was supposed to do? Did our service technician do what he was supposed to do? I'm, glad you're happy with our products and services, and we're pleased to be able to serve you. Can we expect payment shortly? I notice you're a couple of days overdue."

Typically, if customers have no problems, they quickly apologize for their oversight and mail payment immediately. However, if they do report problems, the collectors can get right to work to resolve them.

Collectors have the authority (and responsibility) to help correct any problem a customer may report. "They can call any department for help," emphasizes Rajaratnam. "If these departments are unable to help, then they can call me." To date, no one has had to call Rajaratnam, highlighting the fact departments in the company work cooperatively.

"It's not a good situation when a customer has a problem," admits Rajaratnam. "However, a customer will live with a problem as long as he or she knows someone will take responsibility and and solve it."

An unsolicited letter to Rajaratnam highlights how sucessful a customer-oriented approach can be. The customer wrote:

I wish to call your attention to your particular employee, Nancy, in your headquarters office. As far as we can tell, Nancy is in your credit department. However, her skill and knowledge of your enterprise suggests that she belongs to, at least influences, all manner of departments, such as credit, accounts payable, service, account support, and sales. Within the past few days, we have been experiencing some fiscal, contractual, and technical problems. With sure and swift fairness, Nancy became a focal point of information and action well beyond what I would think of a normal call of duty. We sought information; she made sure we got it. We needed action; she made sure it happened. Promises were kept. Nancy is a superlative representative of your time-honored corporation. Thank you.

If the letter doesn't say enough, consider these numbers:

• The company's average DSO for all customers (end-user customers and dealers) is under 40 days. The industry average is 60+ days
• The company's average DSO for dealers in specific is under 50 days. The industry average is 90 to 200 days.
• Revenues increased 10% this year in what most economists have called a "stagnant economy."
• Profits doubled from the year before.

"And our bad debts are almost non-existent," Rajaratnam concludes.

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