Making Effective Collection Calls
Most people hate making collection calls almost as much as the person on the other end of the line hates getting them, but calls to collect your debt are an important part of getting money from slow-paying customers.
For best results when making collection calls:
Review your customer’s credit file. Before you get on the phone, refresh your memory about the customer, the customer’s purchase and credit history, and anything else that may help you out during your call.
Mentally prepare. Anticipate what the debtor may say during your call and what responses you can give. Have a sense, in advance, of what you hope to achieve with the call (for example, immediate payment, half-payment now, half in 30 days, and so on).
Have records at your fingertips. Be prepared to use an appropriate document from your file to back up any of your claims about the customer’s account or to refute any of the customer’s claims or excuses for late payment.
Talk to the right person. Figure out who in the company can authorize payment on your account, and talk to that person.
Be a professional. Maintain a calm, confident demeanor, and listen carefully to what the debtor says. Try to identify and resolve complaints that are legitimate. Don’t let the debtor rattle you or make you lose your temper. Prepare and use a script to keep yourself on track.
Take notes. Your notes help you refresh your memory in future dealings with the debtor, and they help you be accurate when you write up faxes, e-mails, or repayment agreements.
Get it in writing. Quickly send the debtor a written confirmation of any points of agreement — if possible using fast methods of delivery such as fax or e-mail — and try to get the debtor to acknowledge the communication. If your debtor agrees to pay you, try to get the debtor to sign an agreement spelling out that arrangement.
Accounting Glossary
accounting equation
The equation Assets = Liabilities + Equity, which demonstrates the two-sided nature of accounting and is useful for explaining the concept of double-entry accounting (or double-entry bookkeeping).
Accounting Glossary
accounting period
The time period for which financial information is being tracked in a business, such as monthly, quarterly, or annually.
Accounting Glossary
accounts receivable
An account that records the amounts that customers owe to a business.
Accounting Glossary
adjusting entry
A correction made to a bookkeeping account that adjusts for accounting errors or other necessary changes at the end of the accounting period.
Accounting Glossary
cash flows
Used to describe the source or sources of cash or how cash is used.
Accounting Glossary
Chart of Accounts
A list of all the accounts used by a business, including what types of transactions go into each account.
Accounting Glossary
debit
An accounting entry that increases an asset or expense account, and decreases a liability or income account.
Accounting Glossary
dividends
A portion of a company’s profits paid by share of common stock on a quarterly or annual basis.
Accounting Glossary
FASB
Financial Accounting Standards Board. FASB is the highest-ranking authority in the private (non-government) sector of the U.S. for making pronouncements on GAAP and for keeping accounting standards up-to-date.
Accounting Glossary
Federal Unemployment Tax
In the U.S., the fund that used to be known simply as Unemployment. Employers contribute to the fund, and states also collect taxes to fill their unemployment fund reserves. (The acronym FUTA means Federal Unemployment Tax Act.)
Accounting Glossary
fidelity bonds
A type of insurance — typically carried by employers for their employees — that helps guard against theft and reduce the risk of loss.
Accounting Glossary
FIFO
First-in, first-out. A method for costs of goods sold in which a business charges out product costs to cost of goods sold expense in the chronological order in which the goods were acquired.
Accounting Glossary
fungible
Describes a product that is interchangeable and virtually indistinguishable from another product.
Accounting Glossary
General Ledger
A summary of all of a business’s accounts and transactions.
Accounting Glossary
IASB
International Accounting Standards Board. The IASB (based in London) is the main authoritative accounting standards setter outside the U.S.
Accounting Glossary
Journals
The location in which bookkeepers keep records (in chronological order) of daily company transactions.
Accounting Glossary
LIFO
Last-in, first-out. A method for costs of goods sold that selects the last item you purchased first, and then works backward until you have the total cost for the total number of units sold during the period.
Accounting Glossary
LLP
Limited liability partnership. A legal structure that state laws offer to qualified professionals in which all the partners have limited liability.
Accounting Glossary
PC
Professional corporation. A legal structure that state laws offer to qualified professionals who otherwise would have to operate as an unlimited partnership liability.
Accounting Glossary
petty cash
A cash account that businesses keep on hand for unexpected expenses.
Accounting Glossary
revenue
Monies that are collected in the process of selling a company’s goods and services.
Accounting Glossary
salvage value
The amount that an asset is worth after it has been fully depreciated.
Accounting Glossary
statement of cash flows
A financial statement that summarizes a business’s cash inflows and outflows during an accounting period.
Accounting Glossary
transactions
Economic exchanges between a business or other entity and the parties with which the entity interacts and makes deals.
Accounting Glossary
worker’s compensation insurance
A type of insurance carried by employers that covers its employees in case they are injured on the job.
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