Receivable/Accounts - Information for Credit and Collection Issues

Monday, January 16, 2012

Working With Others - Part II: So, You Are New

Congratulations!  It’s your first day, or first week as a collection agent, either internally at a company to handle accounts receivable;es, or at a collection agency handling third party accounts.  I imagine your head is spinning with all the information being thrown at you, that it’s a work environment that you are unfamiliar with, and you are wondering what it takes to survive, let alone thrive in such an environment.

Well as my previous part of this series addressed, not everyone is meant to be a collection agent.  But let’s assume you have the skill you will need to succeed here.  But you have to get your feet under you.  So what do you need to know?

Those Butterflies in Your Stomach

Every new collection agent, and a few accounts receivable staff, get a feeling of dread initially when they have to pick up the phone.  Why?  Because they think they are about to engage in a verbal confrontation.  But if the call is handled correctly, there shouldn’t be any conflict.

A good collection call is all about negotiating from a position of authority, and establishing control over the situation.  If someone is yelling at you, or is emotional, you can’t possibly discuss resolving their account, so it’s to be avoided at all costs.

And on the practical side, once you have had the inevitable call where you have been told to do anatomically impossible things, as long as you don’t let your emotions rise up to meet the debtor, you’ll be fine.

The most important lesson is don’t be afraid to pick up the phone!  Reaching out to debtors or clients is the only way you will accomplish your job, so do it with enthusiasm.  Don’t wait for people to call you, or depend on letters or emails to garner a response.  There is nothing better for your job than you, speaking in person.

Go In With Your Eyes Wide Open

Nine out of ten debtors in your office are not bad people.  They are people with financial difficulties,  little financial savvy, are living beyond their means, are procrastinators, or simply are sticking their head in the sand and hoping their personal finances will get better.  This means that promises to pay will not always be met, people will get emotional over their financial situation, or your calls will be avoided. 

Perform your duties with a sense of patience, with a sense of empathy for the people you are calling, and speak honestly and forthrightly with these people, without devolving into emotions or let frustration spill into your calls.

Use Your Head

Credit and collections is not rocket science – but it is a great deal of information, trivia, and details to be managed, balanced, and remembered.  Every work environment tailors their credit cycle uniquely to their company policies and structure.    And credit and collections staff need to react to changes in their environment – the only constant is change.  There is going to be a lot to process in your first few weeks, and you will spend a lot of effort remembering the details. 

Don’t stop learning.

The world of credit and collections has cycles and patterns.  Often, it can be repetitious, or rely on habits of your department’s staff, or that of your debtors and clients.  It is so easy to spend your first weeks and months focusing on your new role, and then as you feel you have mastered your position, slip into a relaxed frame of mind.  This is definitely a misstep.  Remember the effort and focus you have now, when you are new, and never lose it.  There are new things to learn constantly, if you continue make the effort.

Remember The Details

Look over all the information available to you, and try to master all the small details.  What debtors or clients say (or don’t say) to you in each call should be carefully noted.  Promises for payments with deadlines carefully monitored and followed up on.  Be prepared to quote account terms to clients, and have your facts ready beforehand. 

In my role managing a collection agency, I emphasize to new staff it is important to read the Collection Agencies Act and Consumer Reporting Act of Ontario, and refresh themselves as needed.  Also, they should be familiar with other collection-related laws that come into play such as the Absconding Debtors Act, Bulk Sales Act, or other provinces’ statutes, so they can sound knowledgeable when speaking to debtors about the rights and role of our company acting as legal agents for our clients.

For their part, credit or collection agents should keep notes that cover their clients’ portfolio instructions, and keep accurate record of their calls, transactions, and the payments and credits on each account.  Be attentive to the details, and watch for patterns. 

As well, I recommend after each call or transaction, a collection agent should take a second and think about what was successful to achieve payment, or what failed to generate a sense of urgency or garner a result – tailor your methods, your language and tone to what succeeds.

Be Organized

In your role, you may be responsible for anywhere from 100 to 2,000 or more files.  You are responsible for thousands, perhaps hundreds of thousands of dollars in unresolved credit.  If you are not organized, and work your files in a priority manner, some of this “inventory” will be lost.  Make sure you can access your files for the day, and reports to tell you if you are succeeding.

In your environment, can you answer or address the following?

·         What priority calls or letters do you need to address each day?

·         What are your daily recovery efforts?

·         How many files do you work on a daily basis?

·         What is your overall liquidation on your portfolio?

·         Is your average DSO going up or down?

If you slip, and fall behind on follow-up calls, or neglect certain records, you can’t create a sense of urgency, and you are going to actually hamper your chances of recovering an outstanding balance later. 

Use Your Time Wisely

You only have so much time – on average 21 business days a month, and seven to eight hours a day.  You will be able to work a finite number of accounts a day.  The best collection agents I have seen develop a keen sense of what accounts are going to pay, and do not use their time needlessly.

And furthermore, don’t work your portfolio blindly.  Use a bit of your time to reflect on your work.  Don’t spend your time on calls or letters or strategies that result in a dead end.  Draw a line in the sand – a certain DSO when you send a file to third party collections, or a certain number of calls and letters, before you determine that an account will not be collected, and make your decision accordingly, listing the file with a collection agency, reporting the delinquent account to the credit bureau, or initiating legal action.

Some Final Survival Tips

So, a great deal of this advice is generic, and has to be.  Every environment in our industry is radically different.  But one thing remains constant in my experience.  Every person who has stepped into a collections environment without previous experience goes through culture shock.

·         Be open minded – watch everything around you, and take stock of the staff members that are successful.  Be prepared to change your telephone manner, your vocabulary, and your tone of voice.

·         Do not be bashful with your supervisors or management – communicate with them honestly, and let them know when you have been successful or are having difficulties.

·         Be patient – you will not be a superstar on your first day.  Collections requires momentum, confidence, and experience. 

·         Understand the personalities that are in play – especially in the world of third-party collections, the work environment draws outgoing personalities.  Keep that in mind.  If you are one of those outgoing personalities, be prepared to tone yourself down to fit in a team environment.

·         Also keep in mind that your supervisors or managers may also have strong, dominant personalities.  Don’t be put off or intimidated and understand their needs from you as their employee.

·         Be proactive – think about your challenges, and try to come up with solutions.  Your superiors will appreciate you are self-reliant and proactive.

·         Keep your eye on the ball – your role is to recover funds for your company.  Keep that in mind.

·         Finally, enjoy your work!  You will only last in this career if you gain satisfaction from your work, and your workplace.

If anyone reading this blog would like to share stories of their first days in credit and collections, I would be interested in hearing them.  Whether you have worked at a small or large collection agency, or worked internally as a credit clerk or manager.  Most of us have ended up here by happenstance -- feel free to post your experiences.

Blair Wettlaufer
Kingston Data and Credit

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