This article was excerpted from Ultimate Credit and Collections Handbook. 

Collection Call Telephone Tips
Making collection calls is an art. You need to anticipate what the customer is going to say and be ready for anything. You have to stay in control of the phone call.

  • Making collection calls to your customers has some advantages. They are:
  • Inexpensive--compared to personal visits and individually typed letters.
  • Immediate--produces some sort of answer the moment contact is made.
  • Personal--allows an exchange between two people.
  • Informative--allows you to ask questions, obtain information, and take appropriate action.
  • Flexible--approach can be varied as changing situations demand.

For your collection call to be a success, it must always result in agreement as to what can be done. Following are some things you can do to get your collection calls to bring you results:

  • Use voice mail or answering machines if available. Leave detailed and complete messages, speak slowly and always tell them what you want them to do, such as to please return your call by a certain time or day. Don't leave an open-ended message that just says you called, but not why, or what you want them to do.
  • Always be courteous and professional.
  • If you speak with a secretary or spouse, you can tell them you are calling in regard to an invoice, rather than a debt.
  • Create a sense of urgency by leaving a deadline time to hear from them, whether you speak with a person or leave a message on a machine.
  • Get the name of the person in charge of issuing checks or paying bills.
  • Ask for the best time to call them in the future.
  • Get the name of the person answering your call. If you don't get a call back, ask for that person when you call again. When you speak to the person you are trying to get hold of, you can tell them, "I left four messages with Susie-didn't she give them to you?" This sometimes gets the person to call you back in the future so as not to make the message taker look bad.

The most important things to remember when making collection calls are to get or confirm the name of the person in charge of paying invoices. Try to find out the best time to reach the person you are calling, leave your complete name, company name, phone number, and a request for a call back if you get a person taking a message. Leave the same information on voice mail. Always get the name of the person taking the message and ask the person taking the message when the person you need can be reached.

Common Debt Collection Errors
If you are creating your credit policy and just starting out, you may not be familiar with some common errors or mistakes business owners make when collecting on past due accounts. I have listed some of the most common here for you. Make sure you don't make these mistakes.

  • Not checking customers' credit history before extending credit.
  • Not getting a credit application, agreement, or contract in writing and signed.
  • Not being familiar with the FDCPA and unintentionally "harassing" a debtor.
  • Overlooking small balances.
  • Not asking for the money that is owed because they hate asking for money.
  • Not knowing when it is the right time to turn a debt over to a collection agency.
  • Not having a credit policy in place and enforcing it.
  • Extending credit to anyone who walks in the door or calls on the phone because they "sound like they will pay."
  • Not taking action on NSF notices or bad checks.
  • Not using letters and forms to collect on past due accounts.
  • Not having a credit application.
  • Not pulling credit reports and checking references.
  • Not understanding how to communicate with customers so they stay current.
  • Not having a budget and controlling cash flow.
  • Not knowing how to effectively do business online.
  • Not using small claims court to their advantage.
  • Not using discounts and incentives to persuade customers to pay early.
  • Not educating themselves with online resources and networking groups.
  • Not understanding how a collection agency can work for them.
  • Not knowing how to set up realistic payment arrangements with customers.
  • Not knowing what to do if a customer dies or files for bankruptcy.
  • Not training oneself or staff.
  • Waiting too long to use a collection agency.

If you are aware of these common mistakes you can take steps to avoid them and keep them from happening to you and your business.

How to Correct Debt Collection Errors

  • Enforce your credit policy.
  • Make sure your debtor is "worth" something before suing them-if they don't have any assets there is nothing to attach or garnish if they do not pay.
  • Ask for payment when payment is due.
  • Research and sign up with a collection agency even before you need one, and then place accounts before they are too old.

Always check credit references. If something doesn't seem right, it's probably not. If you are not happy with the references provided to you, ask for additional references. This customer wants credit from you, so you call the shots. If you give them credit without checking them out, they call the shots. The only way to keep control of your money is to have a credit policy in place. Why would you let anyone else control your cash flow?

Silence Is Golden
My favorite tool when making collection calls is silence. I had read about this in books and other collectors tell me about it, and it is really hard to do. Once you do it and get good at it, you will always do it. It works great. Just call your debtor and explain why you are calling as I have mentioned earlier and then just wait for a response. I have had debtors just sit and watch TV; I can hear the TV in the background and they just don't say anything because they really don't know what to say. I have had to say, "Hello? Are you there?" They reply, "Yes." I repeat who I am and why I am calling, and ask the question again. I have had debtors hang up on me, or just swear at me. I have had some tell me their life story of why they can't pay, and others go on and on but make the payment or a payment arrangement.

When you make collection calls and deal with debtors, you might need to brush up on some people skills. I have attended seminars on telephone collections and read books about them as well as books about dealing with difficult people, anger management, psychology, and mediation skills. These are all tools you will need when dealing with a client or customer who has become past due and is unable or unwilling to pay.

I find these tools helpful when performing customer service and networking as well. The more you know about your potential customers and how to handle what their needs are, the more success you will have.

Final Tips for Improving Your Collections Procedures
Some businesses have slow-paying customers or past due balances because they didn't "train" their customers in the beginning. It is important that your customers know your credit policy and/or terms of payment before they become customers. Reiteration of your credit policy, when payment is overdue, is a good step to take in trying to obtain payment. Always ask for payment when it is justly due.

You should never extend credit to a new customer without having them complete a credit application and go through the credit approval policy. Once you extend credit, it is important to maintain accurate records on an account payment history.

Adhere to your collection policies no matter what. You cannot see the future or changing market conditions. Try to keep current with trade reports pertaining to specific companies and industries.

Change your collection letters frequently- you can make them stronger and more action-oriented.

Discourage payments on account or changes in payment terms. Too many payment plans or changed payment terms can impair your cash flow.

When you receive payments "on account" be sure to follow up right away with a letter or phone call thanking them for their payment and telling them what their new balance is and when to send the next payment. Don't ask them when they will send the payment; tell them when to send it.

On large accounts, call or send a reminder just a few days after terms if they become delinquent.

Ask to speak to a manager or owner when making collection calls rather than speaking to a secretary or receptionist. Go right for the decision maker.

If a customer disputes the quality of merchandise or service, price or delivery, you should attempt to resolve this right away. Insist they pay the portion of the bill that they are not disputing while you work out the disputed problem.

If all else has failed, you may want to refer the account to an outside collection agency.

Update your records often, making sure the telephone numbers and addresses you have for your customers are current and up-to-date.