Telephone collection is ideal for an account that owes you an amount of money that you believe is viable to telephone (being more time consuming than an arrears letter).

You need to list acceptable objectives before contacting a customer by telephone, such as:

1. Who will call from your company: this will qualify how important the debt is to your company. If a senior person in your company calls a senior person in the customers company, the importance is accepted by both parties as high

2. A contact name, a director/proprietor/partner: in our scenario a senior contact is a must - see above, further, the person you talk to must be able to provide all the answers. If you find yourself in a position where no one person can make decisions, I would urge you to arrange a meeting: a meeting will usually ensure a frank and honest assessment to evolve into a workable agreement

3. When your company needs payment, be that immediately, within 14 days, 21 days, 28 days: if your company will not survive unless payment is received immediately, then you have little option, if, at the other extreme, you could allow the debt to be put to the side, and continue to trade on a cash only basis, with reasonable instalments on the existing debt you should maintain a profitable relationship.

Bear in mind, when you sue a customer, who has genuine cash flow problems, you end up with an instalment arrangement that will probably take six months before the court orders the first instalment, you obviously will not maintain trade with the customer. Most businesses have good and bad periods.

4. A response to the customer saying "we have no money, and no idea when we will". Or when a customer says "we can't pay, if you want to sue, go ahead we have no money."

5. All available information & previous notes of letter and telephone collection experience with this customer.

The purpose of the above is to ensure that you retain the initiative. If you have a number of options written down you can quickly and positively respond to the customers problem. You may have the following notes:

First Objective: full payment within 3 - 10 days: if the customer is looking for nearer the 10 days, than 3 days, suggest/insist on a post dated cheque, or state that you want cash in 10 days.

Second Objective: split payment of 50% now, and the balance in 7, 14, 21, or 30 days.

Third Objective: payment within 30 days (post dated cheque, or you will collect the cash/cheque from them in x number of days, or they bring the cash to you). The thirty-day period is a significant period in the collection industry. If your debtor is looking at a longer period than thirty days, the prospect of insolvency is great.

Successful telephone collection is achieved through good preparation prior to the telephone call, and more importantly, being in control during the call. You must control three areas, as follows:

1. The debtor 2. The conversation 3. Yourself

WHEN YOU CALL A DEBTOR YOU SHOULD

• make sure you have the person who can give you what you want
• introduce yourself clearly: especially if you are senior in your company
• state clearly why you are calling, "unpaid invoice number..."
• ask them if the payment will be sent immediately
• if payment cannot be promised, ask why (do not interrupt)
• provide a solution: do not ask them what they can pay, and when
• provide them with a second solution: if first solution is not possible
• if second solution is not taken, ask, "out of interest, what can you do?"
• either accept or reject their offer
• Reject: allow, say, 7 days to pay or you will start debt recovery action
• Accept: summarize the agreement, and what will happen if they default
• send a confirmation letter, whether you accept or reject

A number of businesses feel uneasy about calling debtors, and the effect on future business. Consider the following:

1) The customer chose to deal with you

2) The customers need of your specific supply/service

3) You have a very good product/service

4) If you cannot get paid, a competitor is unlikely to get paid

5) Customers easily forget past payment problems (fact)