Seeing that 2007-08 were extremely rough years in our industry, we at Top of Mind experienced a significant rise in slow-pays and no-pays. Ultimately, we found ourselves with high-five figure 90-day+ receivables. Anyone who’s ever been in this position surely is aware of how uncomfortable it can be calling clients and asking for past due payments. After all, if we’re doing our jobs right – our clients ultimately become our friends.
There are basically two common approaches to collecting on receivables – and they’re polar opposites of each other:
Approach #1) The aggressive, finger-pointing, condescending way: I think this is the way most businesses pursue bad debt. Heck, when I was young and ignorant, I let a few personal account balances go late. The increasingly frequent calls I received from my debtors became threatening and borderline obnoxious. Certainly I wanted to make good on my debt, and ultimately I did. My motivation in paying the debt, however, wasn’t to please these bill collectors – it was simply doing the right thing and paying my bill as soon as I could. As far as my debtors were concerned, their tactics worked.
Approach #2) The compassionate, understanding and communicative way: I’d like to share how I’ve handled our bad debt over the past couple years.
- I do not delegate collection calls to my employees. In my opinion, this is the kind of s**t work that causes employees to dread coming to work. It isn’t my employees’ fault that we let some of our clients get behind on their bill, why should it be my employees’ work to clean up a mess management created? 99% of collection calls come from me as the President of our company (with the other 1% coming from my partners).
- I have one ground rule on how I treat a debtor – if they’ll communicate with me, I’ll bend over backward to help them. Clients who owe us money aren’t treated as “B-class” clients. I use my CRM system to take copious notes on all phone conversations and email threads – and I set reminders to check the status at reasonable intervals (depending on Read more