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40 politely-worded templates to get invoices paid

Debt collection etiquette to maintain customer relationships

Debt collection etiquette to maintain customer relationships

There’s no doubt that debt collection ranks right up alongside waxing when it comes to painful and unpleasant experiences. Generally, anything beats chasing customers for money.

Yet, the fact remains that two of the biggest reasons that companies fail are due to poor cash flow and unstructured debt management. 

We’ve covered the most effective ways to handle cash flow in your business and various aspects of successful credit control practices in previous articles. However, knowing these and putting them into practice are two very different things.

What we want to explore in this article is how to maximise debt collection while maintaining good customer relationships.

5 ways to keep your customers

It’s a bizarre thing, isn’t it? Customers purchase your products or services knowing exactly what they want and how much they cost. They understand that they will need to pay for their order - nothing for nothing, right? Yet, when month-end rolls around and it’s time to pay the proverbial piper, they are nowhere to be found. 

To add insult to injury, many customers are rude and defensive when chased for payment, despite knowing that they’re on the wrong side of this transactional equation. It can be a real challenge to deal with this in a way that keeps both parties happy.

Part of your mental and emotional preparation should certainly involve understanding how your call is going to make the recipient feel, and how they are likely to respond. Embarrassment may result in defensive or angry behaviour, sarcasm, or a rude and abrupt manner. They may also be evasive and vague if there is some question in their mind as to when they will be able to pay. This knowledge can colour your own behaviour if not managed correctly, and result in poor business outcomes.

1. People are people

One of the very first things to do when mentally preparing for a morning of debt collection is to remember that you’re speaking to a human being. This is someone’s mother, sister, brother, or son, and while they may be unpleasant to deal with, they still deserve a level of dignity and respect. 

There is a problem, however, when the old adage "the customer is always right" comes into play and the conversation is weighted against the debt collector. This often allows debtors to be impolite and aggressive - without consequence.

If you know and accept this going in, it tends to make the process less personal and easier to manage, keeping emotions firmly in place. 

One of the very first things to do when mentally preparing for a morning of debt collection is to remember that you’re speaking to a human being.

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2. Prepare the facts

“To be prepared is half the victory.” That means knowing exactly what we’re going to say, who we need to speak to, and what the customer situation is. (This is where it pays to have a good CRM system in place so that you have all the most current correspondence available to you.)

Have you spoken with this company or person before? How did they respond to your call? What is their history with your company? Is this a common problem with them? Once you have a handle on the situation you’ll be in a better position to understand, negotiate, or put a little more pressure on them if the situation requires it. 

Arming yourself with the specifics of their account gives you the control you need to avoid the snare of hedging or procrastination. There is no room for you to be blindsided by questions that you can’t answer which place you back at the beginning of the debt control process when you have to call them back.

3. Excuses excuses

When people don’t want to - or can’t part with their money, they will have a dozen excuses ready for you. Chances are, you’ve heard that the check is in the mail, that they never received the invoice, or that they have a cash flow problem.

The good news is that there are ways to handle this that don’t result in an argument or embarrassment. 

For example, if the check is actually in the mail, then they will be able to provide you with the check number, the amount, and the date it was mailed. If they say they have not received your invoice, ask for confirmation of the email address to which the invoice needs to be sent. Then arrange to follow up within 10 minutes. 

Don’t be afraid to ask open-ended questions and then be silent. It’s during these few seconds of silence that important nuggets of information surface that may help you to understand the situation a little better, and react accordingly.

We can’t possibly have a rebuttable for every excuse, but we can maintain control of the conversation in a firm and respectful manner if we know what’s coming. 

Don’t be afraid to ask open-ended questions and then be silent. It’s during these few seconds of silence that important nuggets of information surface...

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4. Professionally authoritative

We are all acutely aware of the fact that over 30% of our communication lies within our tone of voice and choice of words in contrast to the message itself. This matters when making debt collection calls. 

Certainly, a smile on your face and a pleasant manner is the best foundation for a potentially unpleasant phone conversation. You don’t know how this call is going to go, so begin with a positive note and set the tone for a pleasant and professional conversation. 

However, being agreeable doesn’t make you a pushover. You can still maintain a level of authority and be kind with it, which is a perfect blend when making difficult calls.  

A professional tone commands attention, and this entails slowing your speech down, speaking clearly, pausing, and not eating or drinking during the conversation. These telephony tips are useful to cultivate for areas outside of debt collection but are essential when you need your audience to listen and act. 

5. Remain in control

In today’s difficult economic climate our valued customers may well have a valid reason for paying late. When you consider that acquiring a new customer costs up to five times more than retaining an existing one, it becomes clear that there is room for understanding and compromise in this difficult arena. 

Remaining in control of the conversation doesn’t mean bulldozing over your customer, but it does mean driving the bus to a mutually beneficial outcome. You don’t want to lose your customer, but you would like them to pay. They may not be in a position to do so right away, but they don’t want debt collectors crawling all over them and a poor credit record. 

Validating comments like, “I certainly see your issue, that can’t be easy” have a way of disarming them, and encouraging the customer to open up in a safe environment without censure. This puts you on the same side and allows you to work together towards a goal and removes the adversarial element. 

However, if you are well-prepared then you will remain in control of the outcome, whatever that may be. If not full payment now, then part payment, and a commitment to paying the balance by a particular date. Always return to the original purpose of your call - getting your company paid the money it deserves.

Debt control made easy

Collecting money can be a real challenge and a sticking point for many companies. It is, however, a necessary evil and one which we simply can’t ignore. Sound debt management and efficient credit control practices fall into the category of Business 101 and can’t be stressed enough.

If you’re battling with this part of your business - perhaps you don’t have the staff to constantly follow up on errant customers, or you just don’t like this part of being a boss - then you may want to outsource it.

Our team here at Chaser have mastered the art of collecting money owed to you in an effective and professional manner, careful to maintain healthy, positive relationships with your valuable customers. Ask yourself, how easy would it be for you and your team if you didn’t have to stress about making uncomfortable collection calls? Instead, you just watched those outstanding amounts roll in, month after month? (Download our credit control fact sheet to see how this works.)


Please contact us for more information or a free trial of our services. 

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