Calling Customers that are not Seriously Delinquent
Questions from our Readers
C. Dennis, MBA, CBF
Our collection department does a good job with the balances over 30 days past
due, but cannot seem to achieve the collection goals for balances 1 to 30
days past due. I think it is fair to say the collection staff is uncomfortable
confronting customers that are not seriously delinquent. Any suggestions?
I think there is a widely held belief that it is inappropriate to
call customers until they become seriously delinquent. I think it
is a central part of the problem you described. In my opinion, collection
calls should be made without delay as soon as an account becomes
delinquent. Many companies establish a grace period before any collection
calls are made. I believe this is an invitation for customers to
delay payments, and for this reason I can think of no advantage to
the seller of allowing a grace period before starting the collection
I suggest that you teach your collection staff to start the collection
discussion by requesting/demanding immediate payment in full of the
entire past due balance... not just the balance that is over 30 days
past due. Please also consider the following suggestions:
Set specific and measurable goals for yourself and your subordinates
in the 1 to 30 past due column.
Hold subordinates accountable for not reaching these targets.
This would include disciplinary action for poor performance if
the necessary improvements in collections are not made within a
reasonable [but specific and relatively narrow] time frame.
Consider holding orders for customers 1 to 30 slow --- at least
until they are contacted and make a reasonable and specific payment
Be certain collectors follow up promptly and systematically on
broken payment commitments.
Help to shorten the collection cycle by faxing rather than mailing
any requested supporting documents - even when there are a large
number of documents to send.