Although the economy is improving, collections remains a daunting task for many companies. Recognizing the challenges and establishing necessary procedures can help to turn the situation around. All business owners want to reduce the number of late paying clients and to build stronger customer relationships. The question is, “How?”

Despite all the high-tech solutions available to Accounts Receivable departments today, an old-fashioned phone call should still be the first tool of choice for collection efforts. The reason is simple—a phone call is difficult for customers to avoid indefinitely. However, successful collection calls are a learned skill. To maximize results it is important to invest time to training the individuals responsible for contacting clients and customers who secure payments on overdue invoices.
Learning to implement effective procedures will significantly improve results.

Prepare before making the call: Before picking up the phone, make sure you have access to the necessary information. Review your customer’s payment history, unmet promises and any additional notes about the account. Knowing as much as possible about the customer and the person you are speaking with will help ease the tension and give you more control of the conversation.

Talk to the right person: Too often collectors end up speaking with the Accounts Payable manager, who is not the individual responsible for approving payments. It’s important to determine who in the organization takes care of authorizing payments. Otherwise, you will be wasting time and potentially aggravating the AP manager, who only moves the payment through the process once the invoice is approved.

Don’t beat around the bush: Be clear and concise when asking for the money—a customer is not likely to offer to pay without some pushing. Explain what you need from them politely and professionally.

Let the customer talk: After asking for payment, wait quietly and patiently. If the customer doesn’t respond right away, avoid filling the awkward silence with meaningless conversation. Don’t worry if the customer feels uncomfortable, the silence will prompt them to respond.

Never lose your temper: When talking to a disgruntled customer who refuses to pay, regardless of the reason, don’t let them pick a fight. Instead, end the conversation quickly; telling them you will call back after they have cooled down. Then, keep your promise and call them back by the next day..

Offer a solution: If the customer has a challenge that keeps them from making payments, find a way to resolve the issue. For example, give the customer the option to make partial payments or ask to take a security interest in the assets of their company. Once an agreement is made, repeat it verbally and follow-up with an email documenting it in writing. This will avoid any misunderstanding.

Show appreciation: At the end of a conversation with a customer, remember to thank them for their business. It’s always beneficial to end a conversation on a pleasant note and it will encourage customers to honor their agreements.

Keep it on file : Make sure to note any new promises or agreements in the customer’s file. Also, schedule a follow-up phone call. If a customer knows you will be calling again, they will be more likely to honor their promises and remember important due dates.

Investing time and effort to train staff, and implementing some of these simple steps will increase collections and reduce late customer payments.