A confident, expressive voice is the most important component of a collector’s toolkit. And convincing a customer to remit a past-due bill is greatly aided when a two-way conversation occurs. That’s why placing a series of telephone calls is so critical to a firm’s management of outstanding accounts receivable.
And there’s another reason to pick up the phone when late pays occur. Even though you do have the ability to polish and tweak a past-due letter or email until you think you have hit the right tone and approach, that alone may not reveal any clues as to why the payment is late. That is unless the debtor is helpful enough to explain the delay. But don’t count on that being the case.
The point is, if you don’t know why the payment is late, you are missing out on a crucial piece of information, which may hinder collection efforts.
This is why there’s a downside to snail mail. It’s often a one-way conversation. So it’s no surprise that collectors often lean heavily on the telephone as a collection tool. Speaking over the phone gives a collector the ability to glean “soft” data, which can aid immensely in the collection process. That trumps a letter any day.
What do we mean by soft data? For example, let’s say business X owes your business Y number of dollars, of which 40 percent is sitting in the 90-day column. That’s an example of hard data. It encompasses those facts and figures that factor into managing your business’s overall cash-flow management. That data may include how long a bill has been in arrears and which clients have pledged to remit a certain amount each month until the past-due balance has been resolved.
Soft data is the Holy Grail of collection efforts. It may reveal a debtor’s intentions, capacity to pay and extenuating circumstances. Soft data also includes information as to why a payment will be delayed. For example, a debtor may reveal in a phone call that the business owner is having a problem collecting a large outstanding balance, which has put a squeeze on his cash flow. As a result, that has created a temporary but serious past-due receivables problem for your client.
Knowledge is power. So when a collector understands why a business has fallen into arrears, it’s not uncommon for a productive dialogue to ensue. Perhaps the collector is willing to allow more time with the client’s approval, or the collector may discover the debtor has moved one step closer to resolving the issue. The point is that the process will move forward when the flow of communication is moving back and forth, as it should.
This is why it is so important for a business owner not to keep extending payment terms indefinitely. There comes a point when the piper should be paid, and the telephone is your most important tool for collecting those receivables.