Maximizing the Productivity and Effectiveness of Collectors

Collections is a key area of any credit granting organisation, and it is common for organizations to invest in processes, technology and strategy in an attempt to increase the efficiency and effectiveness of this area. Unfortunately, it is also common for organizations to overlook the most important factor in collections – the collectors who make contact with customers every day.

The first tip in this series focused on collector behavior styles and explored the pitfalls of passive and aggressive styles. The second and third tips discussed the most effective collections style – assertive behavior – and its common characteristics. The next few tips will discuss ten ways to improve a collector’s negotiation techniques.

Negotiation tip 1 – Know yourself
In any negotiation situation, it is extremely important to know the strengths and weaknesses that one has when it comes to negotiating. All collectors should know the answers to the following questions:

How do I feel about negotiation?

Am I comfortable negotiating or do I feel under pressure to get it ‘over with’ as quickly as possible?

Collections is largely about negotiating with customers to obtain payments on arrear accounts. Some people are not negotiators – they don’t like it, find it makes them uncomfortable or they give in too easily or quickly and as a result, they tend to fail in the most important step of a collections call. All collectors should determine whether they are capable of negotiating and if not, if they are likely to become capable. If not, they would do better to look for another profession.

Negotiation tip 2 – Know what you want
Before entering into a negotiation, it should be clear to the collector what their objectives are. If they do not know, then when they talk to a difficult client who knows exactly what they want, they will end up losing the negotiation – in other words ending up with a situation which is detrimental to the interests of the organization. In most organizations, this is a recognized issue and collectors are helped with this by being given ‘policy rules’ from which they may not deviate (for example, no promise to pay may extend over more than 3 months). However, these rules are typically too crude – low risk and high risk accounts get the same parameters.

It is best to provide a collector an indication on every account by giving them answers to the following questions:

What is the lowest promise to pay amount appropriate for this account (often expressed as a percentage of the arrear amount)?

What "payment promise" date is the latest you will accept?

Do you want to win, no matter what the cost (in early stage collection, a win-lose could end up with the customer closing their account which is detrimental)?

These answers will empower the collectors by giving them a space within which they can negotiate and clear boundaries over which they know they may not stray.

In next month’s tip, we will consider two more ways of improving a collectors ability to negotiate.

Paul Shortridge is a Senior Consultant at PIC Solutions, the largest customer management solutions company based in the Southern Hemisphere. He has over 5 years experience in the financial services industry. Previously with Nedcor as manager – innovation in retail credit, he headed up a team that successfully rolled out projects to reduce risk, increase revenue and reduce costs across all credit and transactional products. In this role, he implemented initiatives that increased revenue by R100 million and introduced their 8-second home loan pre-approval process. As lead consultant at London Bridge Group, Paul was responsible for the business lead in large scale project implementations as well as assisting the sales team with expanding their market in South Africa. He holds a BSc and MSc in Chemical Engineering from the University of Cape Town.