Getting Delinquent Accounts to Pay Up. Presented by Larry Holmes

Transcription

1 Getting Delinquent Accounts to Pay Up Presented by Larry Holmes

2 Overview 1. Writing a good collection policy 2. Elements of a collection call 3. Handling the no money excuse 4. 5 techniques for collection letters 5. The importance of systematic follow-up 6. Using and social media 7. What to do with bad checks 8. When and how to use thirdparty collectors 9. Legal issues

3 Writing a Good Policy

4 Purposes of a Good Policy 1. It helps us establish our objectives what are we trying to accomplish? 2. It meets legal requirements. 3. It helps foster teamwork and consistency within your organization.

5 Questions a Good Policy Should Be Able to Answer 1. What are your credit terms? 2. Do you offer discounts? Charges late fees 3. Do you charge late fees? 4. What is your documentation policy? 5. Do you do credit checks? 6. Do you ask for references? Collects late fees

6 Questions a Good Policy Should Be Able to Answer 7. When do you turn it over to a third party? 8. Who will be allowed to negotiate? 9. When will the first contact be made? 10. When will the customer be refused services? 11. When will salespeople get involved? 12. When will management get involved?

7 Collection Skills» You have to be able to know what the customer is likely to say and be ready for the unexpected.» You have to be in control of the process.» It all begins with your opening statement.

8 Opening Statement» First, prepare by looking over your customer s information.» Your opening statement sets the tone for how the entire process will go.» It s not what you say that s important, but how you say it.» Your goal is to get the customer involved as soon as possible. 1. Invoice number 2. Relevant dates 3. Total due 4. How much of it is past due 5. Number of days it s delinquent 6. Payment history 7. Details of orders or services 8. Disputes 9. Promises made 10. Promises kept 11. Excuses

9 Opening Statement State the customer s name. State your name. State your organization s name. And then be silent.

10 Ask Questions and Make as Few Statements as You Can Ask if they have questions about what s owed. Ask what is being disputed. Ask if they can pay now. Involve them in creating options for payment. Say you re taking notes. Ask when they will pay.» Don t take it personally.

11 Handling the No Money Excuse 1. Remember who the money belongs to. 2. The no money excuse is just that. 3. Your goal is to move yourself up in the order of priority of who they choose to pay.

12 Handling the No Money Excuse 4. The first question is What has changed? 5. Ask if they re going to file for bankruptcy. 6. Ask if they re going out of business. 7. Negotiate a payment schedule. How much are you short? What is a reasonable time period for you to pay the debt? Have them sign an installment promissory note.

13 5 Tips for Collection Letters Make sure the letters are 1 page with lots of white space. Write in short paragraphs. Use the KISS principle: Keep it simple, stupid. Don t be too vague. Be very specific. Don t write the letters from scratch.

14 The Importance of Follow-Up» You always have competition when you try to collect money from customers and your competition is anyone else they owe money to.» Usually where collectors are the weakest is systematic follow-up.

15 The Importance of Follow-Up 1. Categorize your accounts. Amounts owed Days late Pay potential History Attitude ABC system 2. Prioritize your accounts. High priority Medium priority Low priority 3. Allocate your time. Call them immediately and follow up with a letter. Send a letter. Send an urgent plea letter with a set deadline.

16 Using » It s fast and cheap.» Some customers might be more receptive to s.» Fair Debt Collection Practices Act Internet service provider can access s. Employers could have access to a debtor s .» Get your customer s written permission.» Send ultimatums in a letter, not .

17 Using Social Media» More than 800 million users worldwide are on Facebook.» You can use social media to find contact information such as , mailing addresses, and phone numbers.» If you can get a name and birth date, you can search public records.

18 Using Social Media Facebook Twitter» Access can be limited to friends» Photos» Friends» Links» Status updates» Contact information» What s happening right now» Many people use it to tell others what they re doing.» Find people

19 Bounced Checks 1. Contact the customer. 2. Write the customer a letter. 3. Contact the customer s bank. 4. Ask if the bank offers enforced collections. 5. Contact the district attorney s office.

20 Bounced Checks Go to badchecks.uslegal.com and send the customer a summary of your state s bad check laws. Go to small claims court. Turn the check over to a collection agency or attorney who specializes in bad checks.

21 Third Parties 1. Has the customer broken 2 or more payment commitments? 2. Have you found the customer is insolvent? 3. Is the customer returning your calls? 4. Is the customer newly difficult to reach? 5. Are you unable to find the customer? 6. Is there a new owner who refuses to accept debt responsibility? 7. Is the customer refusing to sign a promissory note? 8. Have you made at least 5 attempts to collect the debt?

22 What type of accounts do you handle? Will there be any additional fees? When do you pay your clients? Do you have any references? Do you offer a 10-day demand letter service? Do you have legal contacts? How do you collect the money? How can I track what s going on with our accounts? Can you get it on a trial basis? Can you get a return on your accounts if you suspect them of unethical or illegal behavior? Collection Agencies

23 Lawyers» Lawyers can only file suit in the state in which they re admitted to the bar.» Nationallist.com has a directory of 2,000 collection attorneys across the country.

24 Legal Issues to Consider Fair Debt Collection Practices Act Applies to thirdparty collectors Sets the standard for what you should and should not do State laws prohibit abusive and unconscionable collection practices. Courts will use it to determine if the creditor s practice is a violation.

25 Legal Issues to Consider Consumer Financial Protection Agency Act of 2009 Fair Credit Reporting Act Truth in Lending Act Uniform Commercial Code Servicemembers Civil Relief Act

26 Final Thoughts You can t change everything overnight, but you can start taking action immediately. Where you begin is up to you, but that you begin is essential.