Effective collection techniques: collect money while maintaining goodwill with the customer
In collecting money from delinquent accounts, preserving goodwill with the customer is a key principle. We want to raise money by practicing the three Ps: being professional, personable, and persistent. But at the same time, we also want to maintain a good relationship with our customer. We also want to maintain a good reputation.
Just because some of your customers (customers, patients, members, etc.) have a problem today doesn’t necessarily mean they won’t be good customers in the future. And I think most marketers will tell you that it costs a lot more money to find new customers than it does to hold on to the ones you already have.
Michael Coleman, the author of “The Collection Management Handbook,” says that statistically:
If we were all like the 80% who pay on time, we would never have collection problems. All you have to do with those customers is keep them happy.
And don’t worry about the 2% who never plan to pay you. Flip them over for collections. Take them to court. But don’t waste your precious time with them. They are actually trying to scam you.
Where we as accounts receivable professionals and people who collect money can really do some good is with the 18% in the middle who intend to pay us but just don’t think they can right now. But they have a problem, and we have to help them solve it.
So if you want to collect a lot more money faster while maintaining goodwill with your customers, you need to stop thinking of yourself as a collector and start thinking of yourself as a problem solver.
Always use language with your customer similar to this: “I know that together we can solve this problem.” With those simple words the debtor stops thinking of you as a collector. In the eyes of the debtor, you are now a problem solver. And you’re working with your debtor on the same side of the table to try to resolve the issue.
That’s what successful accounts receivable professionals do. They work to get their debtors on their side in an effort to resolve the problem. And an additional benefit may be that, instead of having a delinquent debtor, you have a client for life.