Credit and Collections: Calling Vs Emailing

Superman vs. Lex Luther, James Bond vs. Dr No, Harry vs. Voldemort – so many epic battles are good vs. evil. Not so in credit and collections. Calling vs. Emailing is not pitting good vs. evil but good vs. good or good vs. better or right now vs. later. People have preferences, maybe personal and/or company dictated, about calling or emailing customers for collections related business but both methods have their benefits. The trick is to find the balance that uses the right method at the right time in the right situation.

Calling is an effective way to reach your customers. It is easier to establish relationships when you are one-on-one over the phone. It’s also harder to ignore a problem situation when you are speaking directly with another human. A phone call is essential for all non-routine situations. People are more likely to open up over the phone and you can get more insight into a problem even if that insight comes from reading between the lines. Along that line, it’s easier to solve a problem when you are having a conversation over the phone than back-and-forth over email. Working together to solve problems is also a big component of building close relationships with customers and providing excellent customer service.

Emailing is also an effective way to communicate. Because you can attach invoices and other transactional documents you are assured that your customers know exactly what you are talking about. For established customers who usually pay on time, email is a breeze. Some AP departments don’t answer phones so you must email. It’s also essential for working internationally when office hours don’t overlap due to different time zones. From a time management perspective, emailing is quicker than a phone call.

There are some tactics for using both methods of communication effectively. To start, call all new customers first – in this way you can find out their preferences for future communications. A lot of people will tell you they prefer email – it’s less confrontational, takes less time to respond to than a phone call but it’s also easier to ignore. So you put them on your list of customers to email first. Then, if they don’t respond to your emails, be prepared to call. Same goes for folks who don’t respond to phone calls first. Make sure you have processes in place to follow up if you don’t hear back after 7 days or the 2nd call or email. When you follow up – it is a best practice to use more than one method of communication.

Never rely on just phone or email unless a client has proven to be consistently on-time and always replies in a timely manner to your communications. If you email a customer and get no response, always call to follow up. And if you call but have to leave a voicemail, also send an email. This helps eliminate problems caused by having the wrong email address or phone number as well – the more methods of communication you use the more likely you are to get through to a customer. By using both methods in tandem you get the best of both worlds and are able to effectively use both calling and emailing in the best possible way they were intended.

Small Business Credit and Collections

Credit and Collections is a key function performed or supervised by the owner in a small business. It provides more business than possible otherwise, but it also creates a significant level of financial risk. Familiarity with the credit terms of one’s industry and the typical bad debt experience in that industry is important to know. A bad debt experience of 1% of sales is considered a cost of doing business in some industries.

The credit, collection function should be organized with written policies and procedures concerning: credit application, checking credit, granting credit, following up credit granted and collections. Applications should be based on industry standard forms with at least three commercial references. Local credit agencies and possibly national agencies should be joined to provide the best possible basis for the credit granting decision. Credit limits should be established based on the time in business, the legal form of the business entity, their credit history, financial stability based on financial reports and the volume of business. Sole-Proprietors should be asked to sign a personal guarantee. You would start with a smaller number and based on the applicants payment history increase the limit as general economic conditions allow and their payment history justifies. Credit should be monitored regularly based on an aging of the account.

Follow-up should begin with confirming receipt of the invoice. Then at regular intervals +30, +60 and +90 the follow-up process should be routine and worded to reflect the seriousness of the time past due. At an appropriate point the account should be suspended until payment is received and the account is back to within terms. At the 90 day point a letter should go out notifying the customer that if payment is not received promptly the account will be forwarded to an attorney.

Bad checks can be filed on in the Justice of the Peace office in the State, County and Precinct where it was passed. Checks should be marked NSF or account closed. Stop payments have to be filed on in civil court. Each NSF check should be accompanied with proof that it was mailed as certified in an attempt to collect the debt before it can be filed on in court. Account closed checks can be filed without the proof of certified mail. An affidavit must be completed, signed and notarized. The original returned check, proof of certified mail and the affidavit must be submitted together.

These actions will not guarantee payment, but they will eliminate any surpr

The Hidden Costs of Computerizing Credit and Collection Departments

Most credit departments in America today have become computerized. The credit analysts and collection specialists have been replaced by customer service representatives. The receptionist has been replaced by an obnoxious sounding electronic voice. All these changes have come at a cost to you, the consumer.

When applying for credit, the consumer is now to reduced to a set of numbers that are entered into a computer. Based upon a specific formula, the request for credit is either accepted or denied. Each customer service representative in the credit department is issued a generic set of instructions, and granted an equal amount of authority regarding how to handle every request. In the collection department, the customer service representatives are also issued generic instructions about how to handle disputed claims.

In collection departments many times, extension and deferral requests are now handled by computers . Injecting technology into both of these departments results in financial and emotional costs to consumers. How many of us have designated thirty minutes of our lunch hour to contact one of our creditors to resolve a problem, and after navigating the electronic maze, have been told the estimated wait for this call would be fifteen to twenty minutes? We have various responses to this situation. Our first inclination is to hang up and get on with our lunch hour. This response is understandable, especially if we are sure that the creditor we are calling is the one who is at fault. Unfortunately it comes with the risk of damaging our credit rating and/or costing us significant late fees or finance charges. Another response is to wait on hold for fifteen to twenty minutes.

By the time we talk to a customer service representative, our frustration level is high, and we will likely will have to ask for a quick resolution because our time is running out. In most work places today, personal phone calls are not allowed on company phones. We are required to use our cell phones to make these calls. If it is necessary for us to spend sixty minutes a week contacting our creditors to straighten out their errors, we are using 240 anytime minutes of our cell phone plans. These calls account for over half of a 500 minute cell phone plan!!! In many cases we experience the ultimate in frustration when we spend thirty minutes of our lunch hour trying to deal with a problem, and we discover that the customer service representative we are talking to does not have the authority to handle our dispute. We end the conversation knowing that we will have to spend another lunch hour on the phone with that creditor.

Waiting on hold for long periods of time during a work day can cause people to compromise their jobs. Since people can ill afford late fees and finance charges, they feel as if they have no choice but to continue with the phone calls which cut into their work day. If contact with a collection department becomes too difficult, people who start the process in good faith, may convert to become people who do not care anymore. In many instances, being denied quick access to credit and collection departments results in customers incurring damaging information on their credit reports. One of the results of eliminating qualified people in credit departments in exchange for using generic computer driven credit guidelines to grant credit, is higher risk and more costly credit. Chances are that customer service representatives will not be able to solve problems such as a computer increasing an interest rate from 6% to 19.9% on a customer’s bill because the payment is recorded as a day late, even though the payment arrived on time and was misapplied by the creditor’s accounting department.

At best, it will probably take multiple calls to the institution to correct the problem. The number of credit cards issued to people that can ill afford to have them is another outcome of generic credit policies. Once again, the subsequent payment defaults on these cards are passed onto all cardholders. Due to the considerable sums of money generated by late fees, finance charges and increased interest rates instated after late payments, credit card companies can afford to carry substandard credit card holders.

Some of the results of eliminating collection specialists in collection departments are:

1) Generic instructions do not cover all collection problems.

2) Customer service representatives do not have enough authority to enable efficient solutions for some common problems.

3) Customer accounts become referred further into the collection process due to inadequately trained customer service representatives who cannot “think outside the box”.

4) Due to computerization, it is rare to be able to access the same customer service representative twice. Therefore the customer has to give the complete account history each time he or she makes a call in order to bring the new representative up to speed.

5) When customer service is outsourced, the people working in the phone banks have no background on the accounts, and are unfamiliar with the original representations made by the company.

6) When outsourcing occurs outside this country, many times communication is difficult due to the limited English vocabulary of the customer service representatives.
Before technology was introduced into corporate America, the sales, credit and collection departments worked in concert. In the corporate environment of today, too many times the sales, credit, and collection departments live out the cliche that the “right hand does not know what the left hand is doing”. The consumer is the one who pays for this chaos.

I had a career in the credit/debt field for 24 years. I have been on the side of banks, le

Keeping Burnout at Bay in the Credit and Collections Department

It takes a special breed of person to call clients and ask for money – and to do it over and over again. It’s a task that’s both adversarial in nature and involves repetitive efforts. While those credit and collection job characteristics are unavoidable, not everyone is fully aware of the impact on staff members. Of all the professionals that make up a media organization, these specialists are more prone to burnout than just about anyone.

The situation has been compounded in recent years by staff reductions and budget constraints – combined with the expectation that employees maintain the same, or often higher, levels of productivity. Those challenges make it crucial for managers to recognize when their staff is overwhelmed, and to have remedies to alleviate the stress.

Burnout often occurs among the hardest-working individuals in the department, as they are usually the ones going to the extra mile to get the job done. According to an article on JobDig.com written by Liz Bywater, president of the Bywater Consulting Group, some of the most apparent warning signals include reduced performance and productivity; increased irritability; quickness to argue with clients and coworkers; decreased creativity, as well as reduced energy and apathy.

There’s a certain irony to the whole situation: when employees are expected to do more with less, it can often have an opposite effect. Not as much work gets done, which clearly ends up costing the organization more money. If the burned-out employee reaches the point of actually leaving the organization, there is the added cost of turnover and an even further loss of productivity.

It’s important to let your staff know that if they are experiencing any of the symptoms associated with burnout, it is okay to speak with you about it. With unemployment running at all-time highs, employees may not be as willing to express any sort of dissatisfaction with their job for fear that they can be easily replaced by a long list of available candidates.

This shouldn’t, however, keep managers from creating an environment that encourages candor, so long as they are able to differentiate between which employees truly are burned-out and need assistance and which ones might just be looking to take advantage of the situation. There’s certainly a delicate balance in keeping two-way communications open while maintaining fairness in the department.

There are other ways to rekindle employees’ energy and focus, depending on a given company’s size and resources. Not every organization has the ability to implement ideas like Facebook’s new Hackamonth program, which enables engineers to join a new team for a month and then go back to their regular positions.

Nor can they necessarily steal a page from Google’s infamous 20% time initiative, which allows some employees to work one day a week on their own personal projects. These cutting-edge programs certainly do a lot to quell burnout and foster an engaged workforce, but they are obviously not an option for most smaller-sized firms.

Credit and collection managers can, however, implement programs on a smaller scale that can have just as positive an effect. One of the easiest to incorporate is a cross-training program, which benefits both the individual and the department as a whole. Something as simple as learning a new task can create a sense of satisfaction and revitalization.

If your collectors are each assigned certain accounts by age of delinquency or by product or region, for example, try switching accounts around after a certain number of attempts, or at different intervals.

Fostering a sense of teamwork and letting staff in on some of the decision-making aspects of their job and the department’s goals can also create a renewed sense of belonging and importance. After all, there are myriad studies indicating workers’ job satisfaction is often derived more from these intangibles than from the actual paycheck.

Ensuring that the members of your staff are maintaining work-life balance also will do wonders. Encourage daily breaks – from a lunch out with the department to a short pause that allows an employee to work on a personal project.

Taking a job-related class or attending a conference or seminar adds variety to an employee’s routine while benefiting the organization. Managers who cultivate an atmosphere where balance is a priority and open commun

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