Description of a Collections Position

A collections position is one that requires intelligence, drive, tact and organization to achieve the desired task: Collect the account and keep the customer. A collections person can't take for granted that a check will be forthcoming simply because a contact has been made.

Time is Money

Since time is money, collections people have to always keep in mind that their time has to be well spent. In order to maximize the collection potential of the accounts receivable, the collector must collect on the largest accounts first and work down to the lowest accounts. Collectors who work their accounts alphabetically are often surprised that they lose accounts to bad debt in the lower part of the alphabet. Running an accounts receivable report by the dollar amount, from highest to lowest, allows the collector to spend time where it can do the most good.

Organization

Whether a company provides a software package (and most do now), a collector has to write down all the contacts and the results of contacts for follow-up. Many customers, having been trained by other suppliers how not to pay, will say whatever they need to tell collections people just to have them hang up. A professional collections person will confirm the information, seek details (check number, date, amount) and follow up with that information should the "promise" not come to fruition. The customer will realize this supplier has a system and cease avoiding payment in future. Follow-up dates should be no later than the average amount of time it takes the average letter to arrive from the customer's location (this depends on whether the supplier is in the same city or across the country or in other parts of the world).

Intelligence

That a collections position requires intelligence is something almost new to the concept of collections. For many years the joke in business was that collectors were little more than muscle used to make customers upset. After economic downturns in each of the past few decades, this perception has changed.
A collections person must be smart enough to ask probing questions of customers to secure payment. Asking open ended questions that require detailed answers and real information can mean the difference between a promise to pay and a payment received.
Thus each customer contact must have a "purpose to call" and questions designed by the collections person to achieve the purpose.
Is there a dispute with the customer?
Has the customer received all they ordered or contracted for?
Is there another problem holding up the payment?
If these questions are not asked, the customer might well be able to withhold payment believe themselves to be in the right.
Eliminate disputes and payment will follow.
If the customer does tell of a dispute, seek the undisputed portion of the invoice or statement. Cash flow is king and this will release some of it back to the company.

Drive and Tact

The final attributes are drive and tact. Customer service is vitally important because it is costly to replace customers. Collections personnel have to be focused on collecting the money without aggravating the customer. The collections person has to make a suitable number of customer contacts per day to achieve goals set by management while maintaining a customer service focus designed to uncover disputes, solve problems and collect the account.
The collections position has the opportunity to resolve problems from other parts of the company and ensure customer loyalty even as they maximize profitable sales collecting outstanding accounts receivables.

Conclusion

The collections worker will most often spend more time communicating with the customer than any other branch of the company. They have the opportunity to build co-operative relationships that will strengthen alliances and improve communication between the two companies. They are vital to the continued success of any company or corporation in the modern economy.

References

• National Asscociation of Credit Management
• Credit Management Association

Resources

• Credit Institute of Canada