Hi:
When an individual or a business finds it necessary to contact a collection department or customer service department, here are some tips on documenting the phone call:
1) Get the full name, ID number, if applicable, of the person representing the company during the phone call.
2) If it's a payment arrangement that is being requested, communicate it to the collections person and document his or her response. Most reasonable requests will be accepted, and it is important to put down everything in writing to validate the agreement.
3) If the collector offers an alternative arrangement that is acceptable, document it the same way.
4) If the initial payment arrangement is denied, but is reasonable, ask to talk to a supervisor. Make sure to get the supervisor's name and ID number as well.
5) After a suitable payment arrangement has been hammered out, make sure to read it back to the collector, informing him or her that you've documented the call.
6) If the payment arrangement extends over a long period of time, it is a good idea to have the creditor put the arrangement in writing and send a signed copy to you.
If you are calling a creditor because the company has made a billing error on your account, the call should be carefully documented in the same manner. Since corporations have so many customer service call centers located all over the country, it is extremely important to document the name and ID number of whomever handled your call in the event that your call needs to be referenced in a future conversation. Generally speaking, documenting phone calls and creating a phone log about each problem or issue will allow you to remedy disputes in a more efficient manner. Tomorrow I'm going to start writing about collection negotiation.
Until then,
Alan
Showing posts with label collections. Show all posts
Showing posts with label collections. Show all posts
Tuesday, May 8, 2007
Monday, April 30, 2007
Setting Up Collection Systems For A Small Business
Hi,
Every small business needs a well planned system to actively monitor accounts receivable. For a system to be successfully implemented, consider the following:
1) Do most customers get paid on a regular basis for their goods and services, or are they contractual businesses who get paid on an irregular basis? It is a good idea to split these customers into categories according to criteria.
2) For regular paying customers, a collection system needs to be in place consisting of three phone calls and three letters. The first phone call is informative notifying the customer of the past due amount and obtaining a date for payment. The second phone call is made three days after the promised due date and references the first call and promised due date and the fact that payment has not been received. The customer is told that payment is due immediately, setting the date. The third phone call is to say that if payment in full is not received within forty eight hours, all action necessary to collect on the account will be taken. This may include obtaining the services of a collection agency and/or attorney. Each of the phone calls should be formalized in letter form and mailed out immediately following the call.
3) For irregular paying customers, it is necessary to follow the same collection system, only the original payment date is established at the time of purchase. In the case of some contract labor, it might be necessary to extend payment dates, as the customer might not have received expected payment for a completed contract. If this scenario unfolds, require the customer to give constant updates, as on numerous occasions, the customer might be over extended and the amount due to the customer might not cover expenses.
To collect an NSF check:
1) Call the customer to tell him or her that payment is required immediately for the check.
2) Either call or take the check to the bank the customer drew the check on to see if the check will clear. The NSF check may be presented to the customer's bank for payment after it has been returned by your bank.
3) If no payment is received within 48 hours, contact the customer to tell him or her that whatever actions necessary to collect the account will be taken. These may include collection agencies, and in some cases, turning the check over for prosecution. NSF check laws vary state to state. It is important to be informed about the ones governing your state.
4) If a decision is made to accept repayment arrangements on an NSF check, it needs to be closely monitored and short in duration. Phone calls on NSF checks should be immediately followed up with letters.
If all collection efforts fail, it is imperative to take further action as soon as possible. Statistically, the further accounts receivable age, the chances of recovery diminish.
Tomorrow I'm going to start writing about the advantages and disadvantages of renting, leasing and buying equipment for businesses.
Until then,
Alan
Every small business needs a well planned system to actively monitor accounts receivable. For a system to be successfully implemented, consider the following:
1) Do most customers get paid on a regular basis for their goods and services, or are they contractual businesses who get paid on an irregular basis? It is a good idea to split these customers into categories according to criteria.
2) For regular paying customers, a collection system needs to be in place consisting of three phone calls and three letters. The first phone call is informative notifying the customer of the past due amount and obtaining a date for payment. The second phone call is made three days after the promised due date and references the first call and promised due date and the fact that payment has not been received. The customer is told that payment is due immediately, setting the date. The third phone call is to say that if payment in full is not received within forty eight hours, all action necessary to collect on the account will be taken. This may include obtaining the services of a collection agency and/or attorney. Each of the phone calls should be formalized in letter form and mailed out immediately following the call.
3) For irregular paying customers, it is necessary to follow the same collection system, only the original payment date is established at the time of purchase. In the case of some contract labor, it might be necessary to extend payment dates, as the customer might not have received expected payment for a completed contract. If this scenario unfolds, require the customer to give constant updates, as on numerous occasions, the customer might be over extended and the amount due to the customer might not cover expenses.
To collect an NSF check:
1) Call the customer to tell him or her that payment is required immediately for the check.
2) Either call or take the check to the bank the customer drew the check on to see if the check will clear. The NSF check may be presented to the customer's bank for payment after it has been returned by your bank.
3) If no payment is received within 48 hours, contact the customer to tell him or her that whatever actions necessary to collect the account will be taken. These may include collection agencies, and in some cases, turning the check over for prosecution. NSF check laws vary state to state. It is important to be informed about the ones governing your state.
4) If a decision is made to accept repayment arrangements on an NSF check, it needs to be closely monitored and short in duration. Phone calls on NSF checks should be immediately followed up with letters.
If all collection efforts fail, it is imperative to take further action as soon as possible. Statistically, the further accounts receivable age, the chances of recovery diminish.
Tomorrow I'm going to start writing about the advantages and disadvantages of renting, leasing and buying equipment for businesses.
Until then,
Alan
Wednesday, April 25, 2007
Collection Phone Calls
Hi:
Many small business owners avoid calling their past due accounts for a variety of reasons. The most common one is that they do not want to create ill will with their customers. The second reason is that they do not have the time to set aside to make the initial calls, and then to follow up on those calls. What a business owner says during his or her initial call to a customer can determine whether or not a customer will bring his account current. There is a standard set of three collection calls a business owner may consider using:
1) The first call is pleasant and firm, providing the customer with the exact amount that is past due. Whenever possible, a payment date should be set during the phone call.
2) The second call is short and to the point. The customer needs to know that the business owner will take whatever action necessary to collect the account. Once again, determining a specific payment date is very important.
3) If no payment is received by the specific date, it is important to give the customer one last phone call notifying him or her that the account will be turned over to a third party (collection agency/attorney) for collection.
If a business owner decides to accept a repayment schedule from a client, notify the client that it will be put in writing and mailed to him or her. It is important never to tell a client a collection technique will be implemented, if there is no intention of following through with it. If a business owner has past due accounts, but not the time or inclination to pursue them, hiring a part time employee to make collection calls might be an option.
Tomorrow I'm going to write about how to select a good collection agency or attorney.
Until then,
Alan
Many small business owners avoid calling their past due accounts for a variety of reasons. The most common one is that they do not want to create ill will with their customers. The second reason is that they do not have the time to set aside to make the initial calls, and then to follow up on those calls. What a business owner says during his or her initial call to a customer can determine whether or not a customer will bring his account current. There is a standard set of three collection calls a business owner may consider using:
1) The first call is pleasant and firm, providing the customer with the exact amount that is past due. Whenever possible, a payment date should be set during the phone call.
2) The second call is short and to the point. The customer needs to know that the business owner will take whatever action necessary to collect the account. Once again, determining a specific payment date is very important.
3) If no payment is received by the specific date, it is important to give the customer one last phone call notifying him or her that the account will be turned over to a third party (collection agency/attorney) for collection.
If a business owner decides to accept a repayment schedule from a client, notify the client that it will be put in writing and mailed to him or her. It is important never to tell a client a collection technique will be implemented, if there is no intention of following through with it. If a business owner has past due accounts, but not the time or inclination to pursue them, hiring a part time employee to make collection calls might be an option.
Tomorrow I'm going to write about how to select a good collection agency or attorney.
Until then,
Alan
Tuesday, April 24, 2007
Collection Letters
Hi:
Many small business owners are hesitant to send collection letters and/or call clients that have past due accounts. The primary reason is that they are afraid of alienating their customers. Familiarity with collection techniques can give small business owners the confidence to contact past due customers. Here are some suggestions for effective collection letters:
1) The initial letter sent to a customer should be informative but firm. When the customer reads the letter, he or she should realize that immediate payment is required, or payment arrangements made with the creditor. Stamping a bill past due, in itself, is not a successful means of collection.
2) The second collection letter sent to a customer should give a specific date by which payment needs to be received, or the business owner will take whatever actions deemed necessary to collect the account.
3) The final letter to the customer should inform the customer that their account has been turned over to a collection agency/attorney for collection.
Due to time restraints, many business owners don't contact their customers quickly enough when their accounts become past due. A customer who is experiencing hard times, will oil the squeaky wheel. When people hear that their account is past due, it's harder for them to ignore the call, than it is for them to set aside written communication. If a business doesn't have the time or inclination to make collection calls, it is wise to investigate hiring a part-time person to make the calls on behalf of the business. Tomorrow I'm going to write about different types of collection calls and what type of payment arrangements are the most successful.
Until then,
Alan
Many small business owners are hesitant to send collection letters and/or call clients that have past due accounts. The primary reason is that they are afraid of alienating their customers. Familiarity with collection techniques can give small business owners the confidence to contact past due customers. Here are some suggestions for effective collection letters:
1) The initial letter sent to a customer should be informative but firm. When the customer reads the letter, he or she should realize that immediate payment is required, or payment arrangements made with the creditor. Stamping a bill past due, in itself, is not a successful means of collection.
2) The second collection letter sent to a customer should give a specific date by which payment needs to be received, or the business owner will take whatever actions deemed necessary to collect the account.
3) The final letter to the customer should inform the customer that their account has been turned over to a collection agency/attorney for collection.
Due to time restraints, many business owners don't contact their customers quickly enough when their accounts become past due. A customer who is experiencing hard times, will oil the squeaky wheel. When people hear that their account is past due, it's harder for them to ignore the call, than it is for them to set aside written communication. If a business doesn't have the time or inclination to make collection calls, it is wise to investigate hiring a part-time person to make the calls on behalf of the business. Tomorrow I'm going to write about different types of collection calls and what type of payment arrangements are the most successful.
Until then,
Alan
Monday, April 23, 2007
Small Business Credit and Collection Problems
Hi,
Many small businesses have the same credit and collection problems as large corporations, only they do not have the staff to address these problems. If a small business owner is experiencing an increasing collection problem, it is important to identify the reasons why. In order to do that here are some suggestions of things to look at:
1) Is there a definitive credit policy for extending credit to individuals or other businesses?
2) When an account is opened, is the time taken to verify the information on the credit application? If there isn't a formal credit application, one might be considered.
3) If NSF checks seem to be a continual problem, investigate obtaining a machine to electronically process checks at point of sale. If that is not an option, make sure all pertinent information about the customer necessary to collect on the check in case it's returned is recorded on the check.
4) Is a maximum limit set on charge accounts? Notify the customer of the maximum limit when the account is opened, and if the limit is exceeded, immediately inform the customer.
Customers of small businesses expect to be paid when they perform services or deliver goods to people and will not be offended when a business owner wants to be paid by them. If they do take offense, they're probably not the type of customer a business ultimately wants. If contacting customers is not a strength, one might consider hiring a part time person to call past due customers on behalf of the business. The final step is to turn delinquent accounts, NSF checks etc., over to a professional for collections. This should be done promptly, because the success of collecting on a past due account diminishes with time.
Tomorrow I'm going to talk about specific types of collection calls.
Until then,
Alan
Many small businesses have the same credit and collection problems as large corporations, only they do not have the staff to address these problems. If a small business owner is experiencing an increasing collection problem, it is important to identify the reasons why. In order to do that here are some suggestions of things to look at:
1) Is there a definitive credit policy for extending credit to individuals or other businesses?
2) When an account is opened, is the time taken to verify the information on the credit application? If there isn't a formal credit application, one might be considered.
3) If NSF checks seem to be a continual problem, investigate obtaining a machine to electronically process checks at point of sale. If that is not an option, make sure all pertinent information about the customer necessary to collect on the check in case it's returned is recorded on the check.
4) Is a maximum limit set on charge accounts? Notify the customer of the maximum limit when the account is opened, and if the limit is exceeded, immediately inform the customer.
Customers of small businesses expect to be paid when they perform services or deliver goods to people and will not be offended when a business owner wants to be paid by them. If they do take offense, they're probably not the type of customer a business ultimately wants. If contacting customers is not a strength, one might consider hiring a part time person to call past due customers on behalf of the business. The final step is to turn delinquent accounts, NSF checks etc., over to a professional for collections. This should be done promptly, because the success of collecting on a past due account diminishes with time.
Tomorrow I'm going to talk about specific types of collection calls.
Until then,
Alan
Wednesday, March 21, 2007
NSF Checks
Hi,
NSF checks used to be one of the biggest collection problems for both large and small businesses. This situation has dramatically changed due to the introduction of computer verification technology at point of sale. It has reduced the number of NSF checks by 80%. From a collections standpoint, it is important that each check contains as much information as possible about the customer. There various methods that can be used to collect an NSF check.
1) Notify the customer immediately by phone and or mail that his or her check has been returned by his or her bank and that the matter needs to be immediately resolved.
2) Most banks redeposit checks twice and then return them to the depositor if they are still NSF. The depositor can still present the NSF check at the debtor's bank and get the check processed. This takes care of the people that inadvertently wrote an NSF check and for extraordinary reasons did not have expected funds at the bank. Going to the debtor's bank allows the merchant to resolve the issue without further involving the debtor.
3) Each state has different laws governing the penalty for issuing NSF checks. Merchants need to know the laws applicable in their state. If the debtor has not responded to previous communication, a letter should be sent stating that the merchant will be exercising the rights given under the applicable law to collect on the check. It should be spelled out for the debtor.
4) If no payment has been received after exercising these remedies, the check needs to be turned over to a collection agency.
Following these steps in a timely manner increases the chance of recovery on NSF checks.
Tomorrow I'm going to talk about collecting on car loans and car repossessions.
Until then,
Alan
NSF checks used to be one of the biggest collection problems for both large and small businesses. This situation has dramatically changed due to the introduction of computer verification technology at point of sale. It has reduced the number of NSF checks by 80%. From a collections standpoint, it is important that each check contains as much information as possible about the customer. There various methods that can be used to collect an NSF check.
1) Notify the customer immediately by phone and or mail that his or her check has been returned by his or her bank and that the matter needs to be immediately resolved.
2) Most banks redeposit checks twice and then return them to the depositor if they are still NSF. The depositor can still present the NSF check at the debtor's bank and get the check processed. This takes care of the people that inadvertently wrote an NSF check and for extraordinary reasons did not have expected funds at the bank. Going to the debtor's bank allows the merchant to resolve the issue without further involving the debtor.
3) Each state has different laws governing the penalty for issuing NSF checks. Merchants need to know the laws applicable in their state. If the debtor has not responded to previous communication, a letter should be sent stating that the merchant will be exercising the rights given under the applicable law to collect on the check. It should be spelled out for the debtor.
4) If no payment has been received after exercising these remedies, the check needs to be turned over to a collection agency.
Following these steps in a timely manner increases the chance of recovery on NSF checks.
Tomorrow I'm going to talk about collecting on car loans and car repossessions.
Until then,
Alan
Tuesday, March 20, 2007
Benefits of Collection Agencies for Small Businesses
Hi,
Small businesses have two distinct disadvantages over large corporations in that they usually have no credit or collection departments. This results in accounts receivable with no one available to monitor or resolve them. The business owner is generally busy with other tasks, and his or her small staff is usually strictly clerical. Many times credit is extended due to familiarity with the customer rather than by the approval of pertinent credit information. These factors contribute to small businesses having an higher than average collection problem with their accounts receivable. The business owner fears that customers will be driven away if their delinquent accounts are pursued. It is not uncommon for business owners to have tens of thousands of dollars in very delinquent accounts. Another collection problem for small businesses may still be NSF checks, as they may not have the electronic system in place for point of sale verification. Because small businesses lack the staff to effectively collect on NSF checks, it's imperative that they utilize a third party collection system as soon as possible. In most instances, a collection agency is a perfect fit for a small business. Years ago I had a friend who was a salesman for a collection agency. He told me the story of a small business owner who had a shoe box with dust on it full of NSF checks. It took many, many visits before the salesman was able to convince the owner to give up the shoe box. When he finally did, it contained over 120 NSF checks, some over three years old. Within two weeks, the collection agency had collected over $6,000. of the checks for the business. This is one example of many in which accounts receivable or NSF checks gathering dust are not putting any dollars back into the business. In dealing with NSF checks in particular, the chances of recovery diminish with each passing month. As a small business owner, it is always important to remember that you are entitled to be paid for your goods and services provided to your customers. When you have the need of utilizing outside collection services on your accounts you are exercising your rights as a businessperson. Tomorrow, I'll talk about NSF checks.
Until then,
Alan
Small businesses have two distinct disadvantages over large corporations in that they usually have no credit or collection departments. This results in accounts receivable with no one available to monitor or resolve them. The business owner is generally busy with other tasks, and his or her small staff is usually strictly clerical. Many times credit is extended due to familiarity with the customer rather than by the approval of pertinent credit information. These factors contribute to small businesses having an higher than average collection problem with their accounts receivable. The business owner fears that customers will be driven away if their delinquent accounts are pursued. It is not uncommon for business owners to have tens of thousands of dollars in very delinquent accounts. Another collection problem for small businesses may still be NSF checks, as they may not have the electronic system in place for point of sale verification. Because small businesses lack the staff to effectively collect on NSF checks, it's imperative that they utilize a third party collection system as soon as possible. In most instances, a collection agency is a perfect fit for a small business. Years ago I had a friend who was a salesman for a collection agency. He told me the story of a small business owner who had a shoe box with dust on it full of NSF checks. It took many, many visits before the salesman was able to convince the owner to give up the shoe box. When he finally did, it contained over 120 NSF checks, some over three years old. Within two weeks, the collection agency had collected over $6,000. of the checks for the business. This is one example of many in which accounts receivable or NSF checks gathering dust are not putting any dollars back into the business. In dealing with NSF checks in particular, the chances of recovery diminish with each passing month. As a small business owner, it is always important to remember that you are entitled to be paid for your goods and services provided to your customers. When you have the need of utilizing outside collection services on your accounts you are exercising your rights as a businessperson. Tomorrow, I'll talk about NSF checks.
Until then,
Alan
Friday, March 16, 2007
Collections
Hi,
Yesterday I talked about the importance of the debtor to acknowledge communication from a collection agency. If a person chooses to completely ignore all written communication and repeated phone calls, in many instances the collector has no choice but to turn the account over to the attorneys for litigation. It is important to realize that even something as small as an ignored library fine may be reported to a credit bureau. This can result in significant increases in the cost of everything from insurance to mortgage costs. Remember when a collection agency makes contact, they want to resolve the matter just as quickly as the debtor. So when contacted, immediate response is in the debtor's best interest. The final collection remedy I have not yet discussed is litigation. Very seldom will a collector mention legal action if he or she has not already been authorized by the client to proceed in that manner if necessary. Once an account is transferred to attorneys, 99% of the time, the opportunity for account settlement has expired. If a debtor receives a demand letter from a law firm it is imperative that the debtor communicate immediately with the law firm. Otherwise, the debtor will start incurring high attorney fees and court costs. On many occasions, people are amazed that a relatively small bill (IE $500.00) has all of a sudden grown from $1,000.-$1,500. because it has been turned over to attorneys. The easiest way to prevent becoming involved in a long arduous collection process is to respond immediately to a collection agency and resolve the account. Next week, I will talk about when businesses should submit accounts to collection agencies.
Until then,
Alan
Yesterday I talked about the importance of the debtor to acknowledge communication from a collection agency. If a person chooses to completely ignore all written communication and repeated phone calls, in many instances the collector has no choice but to turn the account over to the attorneys for litigation. It is important to realize that even something as small as an ignored library fine may be reported to a credit bureau. This can result in significant increases in the cost of everything from insurance to mortgage costs. Remember when a collection agency makes contact, they want to resolve the matter just as quickly as the debtor. So when contacted, immediate response is in the debtor's best interest. The final collection remedy I have not yet discussed is litigation. Very seldom will a collector mention legal action if he or she has not already been authorized by the client to proceed in that manner if necessary. Once an account is transferred to attorneys, 99% of the time, the opportunity for account settlement has expired. If a debtor receives a demand letter from a law firm it is imperative that the debtor communicate immediately with the law firm. Otherwise, the debtor will start incurring high attorney fees and court costs. On many occasions, people are amazed that a relatively small bill (IE $500.00) has all of a sudden grown from $1,000.-$1,500. because it has been turned over to attorneys. The easiest way to prevent becoming involved in a long arduous collection process is to respond immediately to a collection agency and resolve the account. Next week, I will talk about when businesses should submit accounts to collection agencies.
Until then,
Alan
Thursday, March 15, 2007
The Collection Process Continued
Hi,
The perfect scenario in a collection agency would be to receive an account, turn it over to a collector, and, in one call, resolve the account with payment in full. Unfortunately, this scenario does not happen very often. I'd like to identify some of the reasons which keep accounts from being quickly resolved:
1) The contact information for the debtor is obsolete. This requires the account to go through the skip tracing department to try to locate the debtor. In many instances, this is a lengthy process that may involve contacting previous next door neighbors, other creditors, past employers, and any personal referrals listed on the credit application. If these avenues fail, written communication to last known addresses may be used in the hopes of getting a forwarding address.
2) Phone calls to the debtor are ignored and initial notification letters are thrown away by the debtor. In these cases, if there is no other known way to contact the debtor, and follow up letters are ignored, these accounts may be turned over to the collection agency attorneys. Many times collection agency letters are ignored, but legal demand letters from a law firm bring debtors out of the woodwork.
3) Payment arrangements are reached and are broken by the debtor after one or two payments. This requires additional communication with the debtor to usually inform the debtor that the full balance is now due.
4) In some cases a debtor may request a call back from the collector after the initial call to give the debtor time to make a settlement proposal or suitable payment arrangement. This may require the collector to make numerous phone calls before the collector makes contact with the debtor again.
5) Collection agencies receive a much higher than average number of NSF checks. As a result, collectors have to make follow up phone calls to try to collect on the checks.
6) If a debtor proposes a settlement offer to a creditor, it is necessary for the collector to get the approval from the creditor and then get back in touch with the debtor. This can be a time consuming process.
These are some of the reasons why collections can be a long difficult ordeal. Tomorrow I will finish my discussion about the collection process.
Until then,
Alan
The perfect scenario in a collection agency would be to receive an account, turn it over to a collector, and, in one call, resolve the account with payment in full. Unfortunately, this scenario does not happen very often. I'd like to identify some of the reasons which keep accounts from being quickly resolved:
1) The contact information for the debtor is obsolete. This requires the account to go through the skip tracing department to try to locate the debtor. In many instances, this is a lengthy process that may involve contacting previous next door neighbors, other creditors, past employers, and any personal referrals listed on the credit application. If these avenues fail, written communication to last known addresses may be used in the hopes of getting a forwarding address.
2) Phone calls to the debtor are ignored and initial notification letters are thrown away by the debtor. In these cases, if there is no other known way to contact the debtor, and follow up letters are ignored, these accounts may be turned over to the collection agency attorneys. Many times collection agency letters are ignored, but legal demand letters from a law firm bring debtors out of the woodwork.
3) Payment arrangements are reached and are broken by the debtor after one or two payments. This requires additional communication with the debtor to usually inform the debtor that the full balance is now due.
4) In some cases a debtor may request a call back from the collector after the initial call to give the debtor time to make a settlement proposal or suitable payment arrangement. This may require the collector to make numerous phone calls before the collector makes contact with the debtor again.
5) Collection agencies receive a much higher than average number of NSF checks. As a result, collectors have to make follow up phone calls to try to collect on the checks.
6) If a debtor proposes a settlement offer to a creditor, it is necessary for the collector to get the approval from the creditor and then get back in touch with the debtor. This can be a time consuming process.
These are some of the reasons why collections can be a long difficult ordeal. Tomorrow I will finish my discussion about the collection process.
Until then,
Alan
Wednesday, March 14, 2007
Starting the Collection Process
Hi,
Let's discuss how an account is handled once it reaches a collection agency. After the account is entered into the system, an initial letter is generated notifying the debtor of the obligation, and the necessity to resolve the matter as soon as possible. Many collection agencies have collectors that specialize in a particular type of collection. This allows the collector to become knowledgeable about documentation supporting certain types of debt which enables the collector to communicate clearly with the debtor and develop a good working relationship with the client/creditor. After an account is received by a collector, he or she reviews the financial information provided by the creditor and any previous communications with the debtor. This allows the collector to become familiar with the debtor's capabilities and to formulate an approach suitable to that account. Caller ID has made it necessary for a collector to be as effective and efficient as possible on the initial call, as in many instances, it might be the collector's last verbal contact with the debtor. Unlike many other types of negotiations that take days, weeks, and in some cases, months, a collector needs to go from start to finish in one phone call. This is the reason collectors prefer to receive a lump sum payment on an account rather than a long drawn out monthly payment arrangement. This is not to say that when the need is apparent for monthly payments on an account, a collector will not be more than happy to accept the arrangement. It is important to remember that if a payment is broken with a collection agency, that the full amount will become due with no further payment arrangements accepted. Resolving a debt with a collection agency might prevent legal action against the debtor, or at the very least, significant damage against the debtor's credit report. Tomorrow, I will continue talking about the collection process.
Until then,
Alan
Let's discuss how an account is handled once it reaches a collection agency. After the account is entered into the system, an initial letter is generated notifying the debtor of the obligation, and the necessity to resolve the matter as soon as possible. Many collection agencies have collectors that specialize in a particular type of collection. This allows the collector to become knowledgeable about documentation supporting certain types of debt which enables the collector to communicate clearly with the debtor and develop a good working relationship with the client/creditor. After an account is received by a collector, he or she reviews the financial information provided by the creditor and any previous communications with the debtor. This allows the collector to become familiar with the debtor's capabilities and to formulate an approach suitable to that account. Caller ID has made it necessary for a collector to be as effective and efficient as possible on the initial call, as in many instances, it might be the collector's last verbal contact with the debtor. Unlike many other types of negotiations that take days, weeks, and in some cases, months, a collector needs to go from start to finish in one phone call. This is the reason collectors prefer to receive a lump sum payment on an account rather than a long drawn out monthly payment arrangement. This is not to say that when the need is apparent for monthly payments on an account, a collector will not be more than happy to accept the arrangement. It is important to remember that if a payment is broken with a collection agency, that the full amount will become due with no further payment arrangements accepted. Resolving a debt with a collection agency might prevent legal action against the debtor, or at the very least, significant damage against the debtor's credit report. Tomorrow, I will continue talking about the collection process.
Until then,
Alan
Monday, March 12, 2007
The Next Step: Collection Agencies
Hi,
Over the next few blogs, I will be investigating various aspects of collection agencies. First it is necessary to get a general idea about the types of accounts collection agencies receive from their clients. About 10% of the accounts received consist of debtors who have overlooked, ignored, or forgotten to pay a small bill and have the means to pay it. 25%-30% of the people who have bills sent to collection are folks that have some financial difficulty and have chosen to ignore these particular bills due to frustration, lack of being able to arrive at a suitable payment arrangement with their creditor, and naivete about the collection process. The next 35%-40% are people that have severe financial difficulties, and in most cases, no ability to service their debts. These people need long term work- outs, and or settlements. Repeated attempts by creditors to deal with these people have resulted in numerous payment arrangements which have not been kept. The remaining 15%-20% are, in most cases, "professional deadbeats." These people have intentionally run up as much credit as they could with absolutely no intention of repayment. In most instances the addresses, phone numbers etc., provided to the creditor are not valid, and, in fact, accurate information was never given in the first place. When creditors send accounts to collection agencies, usually they also send comprehensive payment histories which include all communication with the customers and any broken repayment arrangements. Tomorrow I'm going to start talking about how a collection agency operates.
Until then,
Alan
Over the next few blogs, I will be investigating various aspects of collection agencies. First it is necessary to get a general idea about the types of accounts collection agencies receive from their clients. About 10% of the accounts received consist of debtors who have overlooked, ignored, or forgotten to pay a small bill and have the means to pay it. 25%-30% of the people who have bills sent to collection are folks that have some financial difficulty and have chosen to ignore these particular bills due to frustration, lack of being able to arrive at a suitable payment arrangement with their creditor, and naivete about the collection process. The next 35%-40% are people that have severe financial difficulties, and in most cases, no ability to service their debts. These people need long term work- outs, and or settlements. Repeated attempts by creditors to deal with these people have resulted in numerous payment arrangements which have not been kept. The remaining 15%-20% are, in most cases, "professional deadbeats." These people have intentionally run up as much credit as they could with absolutely no intention of repayment. In most instances the addresses, phone numbers etc., provided to the creditor are not valid, and, in fact, accurate information was never given in the first place. When creditors send accounts to collection agencies, usually they also send comprehensive payment histories which include all communication with the customers and any broken repayment arrangements. Tomorrow I'm going to start talking about how a collection agency operates.
Until then,
Alan
Friday, March 9, 2007
The Evolution of the Collection Department: Part 2
Hi:
In the past few blogs, I have identified some of the problems which developed when computers were introduced into collections departments over the last thirty years. Some of the advantages of computerization are as follows:
1) It allows credit and collections departments to compile statistical data identifying problems and enables the departments to quickly deal with them.
2) Computers allow instantaneous communication among credit, sales and collection departments, transferring documents, pictures etc., throughout the departments.
3) Computers have virtually eliminated one huge problem of the past for retailers in dealing with NSF checks through point of sale terminals.
4) Advanced computerized phone systems have allowed companies to reduce their staff by having many questions electronically answered.
In a well run company the sales, credit and collection departments work in concert. Each department needs the help of the other and can utilize the experiences of each other. Unfortunately, many companies have done away with 75% of their experienced credit and collection people, thereby making it harder for the consumer to be dealt with in a personal manner. The only remedy for this situation is generally to talk with supervisors and sometimes even the bosses of supervisors. One needs to go up the ladder to find a professional with the authority to deal with a particular situation. Monday I will talk about collection agencies.
Have a good weekend.
Until then,
Alan
In the past few blogs, I have identified some of the problems which developed when computers were introduced into collections departments over the last thirty years. Some of the advantages of computerization are as follows:
1) It allows credit and collections departments to compile statistical data identifying problems and enables the departments to quickly deal with them.
2) Computers allow instantaneous communication among credit, sales and collection departments, transferring documents, pictures etc., throughout the departments.
3) Computers have virtually eliminated one huge problem of the past for retailers in dealing with NSF checks through point of sale terminals.
4) Advanced computerized phone systems have allowed companies to reduce their staff by having many questions electronically answered.
In a well run company the sales, credit and collection departments work in concert. Each department needs the help of the other and can utilize the experiences of each other. Unfortunately, many companies have done away with 75% of their experienced credit and collection people, thereby making it harder for the consumer to be dealt with in a personal manner. The only remedy for this situation is generally to talk with supervisors and sometimes even the bosses of supervisors. One needs to go up the ladder to find a professional with the authority to deal with a particular situation. Monday I will talk about collection agencies.
Have a good weekend.
Until then,
Alan
Thursday, March 8, 2007
The Evolution of the Collection Department
Hi,
The collection departments of most companies have gone through very similar changes to their credit departments. In the past, when a problem existed on an account it was handled by someone who had the authority to deal with it and solve the problem. Today in many instances when one calls a collection department, one is talking to a customer service representative who has limited authority and is operating under generic guidelines on how to handle each call. It is often necessary to contact collection departments and talk to three or four customer service representatives before one finds someone willing to deal with the particulars of a specific situation. This often results in in the customers becoming frustrated and just paying the bill. Another method employed by corporations in order to save money, is to make access to collection departments very difficult. This is done by setting up a myriad of electronic options, giving the customers a multiple of generic choices, many times of which none apply to their situation. The frustration customers feel when treated this way often results in the customers ignoring their bill, and in the process, damaging their credit. Often time when customers make their way through a maze of generic electronic choices and finally get to a live person in the "collection department" they end up talking to a customer service representative who does not have the authority or ability to deal with their particular problems. The goal of the callers is to make satisfactory payment arrangements for a past due bill. If customer service representatives don't have the flexibility to work with the callers to achieve that end, it is imperative that the callers ask to talk to a customer service representative/ collection supervisor and hope that the supervisor can help find a solution to the problem. On occasion, it might be necessary to request to talk to their supervisor. In the past, when one talked to a collection department, all representatives had the ability and authority to deal with problems. As a cost saving measure, companies replaced most collection people with customer service phone representatives and only kept collection people as their supervisors. This change evolved over the last 25 years as a direct result of the increase in bad credit. Tomorrow I will talk about the effective way collection, credit and sales departments can work together.
Until then,
Alan
The collection departments of most companies have gone through very similar changes to their credit departments. In the past, when a problem existed on an account it was handled by someone who had the authority to deal with it and solve the problem. Today in many instances when one calls a collection department, one is talking to a customer service representative who has limited authority and is operating under generic guidelines on how to handle each call. It is often necessary to contact collection departments and talk to three or four customer service representatives before one finds someone willing to deal with the particulars of a specific situation. This often results in in the customers becoming frustrated and just paying the bill. Another method employed by corporations in order to save money, is to make access to collection departments very difficult. This is done by setting up a myriad of electronic options, giving the customers a multiple of generic choices, many times of which none apply to their situation. The frustration customers feel when treated this way often results in the customers ignoring their bill, and in the process, damaging their credit. Often time when customers make their way through a maze of generic electronic choices and finally get to a live person in the "collection department" they end up talking to a customer service representative who does not have the authority or ability to deal with their particular problems. The goal of the callers is to make satisfactory payment arrangements for a past due bill. If customer service representatives don't have the flexibility to work with the callers to achieve that end, it is imperative that the callers ask to talk to a customer service representative/ collection supervisor and hope that the supervisor can help find a solution to the problem. On occasion, it might be necessary to request to talk to their supervisor. In the past, when one talked to a collection department, all representatives had the ability and authority to deal with problems. As a cost saving measure, companies replaced most collection people with customer service phone representatives and only kept collection people as their supervisors. This change evolved over the last 25 years as a direct result of the increase in bad credit. Tomorrow I will talk about the effective way collection, credit and sales departments can work together.
Until then,
Alan
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