Receivable/Accounts - Information for Credit and Collection Issues

Monday, March 18, 2013

Restraint and Empathy

This week’s blog is going to look at restraint and empathy as tools at a collection agency. This isn’t just for being compassionate and decent, it is also part of the essential anatomy of a successful collection file.
To give a real example, our office had a file for a husband and wife owing approximately $10,000. They were making payment arrangements of $200 per month, and then failed to keep their payment schedule, and started to avoid calls. We arranged for a default judgment through small claims court and then proceeded to garnish their bank account. You might wonder how this displays restraint and empathy. I will explain shortly.

The New Guy’s Mistake

To start, think of it this way … many new and inexperienced collectors unfortunately develop the habit of calling a debtor and saying “pay this bill or we will sue you!” Half the time, they don’t have the authority (or the knowledge) to take a court action on the file (which I talk about here), and the other half of the time they create a conflict by jumping to the end of the consequences.

A collection file has a certain flow to it. In a perfect scenario, it should run from introduction, to options for the debtor, to resolution, without directly needing to bring the consequences to bear.

Why Do People Pay?

Take a look at all the people who do pay your company – why do they? For the most part, it is because they receive an invoice, or a telephone call, or some sort of professional presentation of a debt. When files start slipping into delinquency or final demands, the successful route needs to be taken – professional presentation, with implied consequences, but without emotion or intimidation.

With Great Power Comes Great Responsibility

Even in a case where consequences need to be brought to bear, it can be done responsibly, and as a last resort. It should be clear to the customer that escalation is being taken with great reluctance. After all, a credit manager wouldn’t say “Well, Frank, you didn’t pay your bill on time, so I sent it to the collection agency the next day – ha ha!” The correct approach would be “Frank, I’m terribly sorry, but our system requires us to send accounts to collections automatically at the 60 day past due mark – I’d love to be able to deal with you as a customer, but it’s out of my hands until this is resolved.”

Notice the difference?

One of the biggest contributing factors to conflict is surprise and emotion – either a consumer is shocked at the action being threatened, or is upset by an emotional presentation. You can take both of these factors out of your presentation by being “the reluctant bad guy”.

By putting yourself on-side with the debtor, and showing empathy with the debtor, you create reciprocal understanding from the debtor to yourself.

So You Sued A Debtor – How Does That Show Restraint?

Getting back to the original story – we started with voluntary payments with the debtors mentioned above. Our client and our office were willing to take a payment arrangement within the husband and wife’s means to avoid action, and only took legal action as a last resort. It’s worth mentioning that the debtors, once they had their bank account frozen called us in a panic, and explained their house with significant equity in the mortgage was coming up for renewal. Rather than place a lien on the house, we recommended to them that they access some of the equity in their home to avoid the lien, plus further court costs and interest, and gave them a deadline to investigate that option.

While we took harsh actions against the debtor, we didn't rush into them, and offered them alternatives along the way.  While they were understandably upset at the judgment and the threat of a lien, they certainly didn't take it personally, and are now working to resolve their account.


Successful collections isn’t based on intimidation or beating someone with a stick. However, it is important to give the debtor a full awareness of their options and consequences for non-payment, and escalate to those consequences only when necessary. Not only will it avoid conflict, it will gain cooperation from the debtor more often than not.

If you are a fellow credit and collections industry colleague and want to discuss collection methodologies, or are a creditor who wants to speak with us regarding our unique approach to collecting debt, which we refer to as our APPRAISE process, feel free to give us a call.

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario

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