Maximizing the Productivity and Effectiveness of Collectors

Collections is a key area of any credit granting organization, 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.

This month’s tip continues our discussion on negotiation and the different ways of improving a collector’s negotiation techniques.

Negotiation Tip 7 – Own your power

All of us would like to feel more powerful in our negotiations, but we seldom spend quality time thinking about how and where we might get our power. All too often, executives enter into critical negotiations with only the vaguest outline of what they are going to do and how they are going to do it.

Alternatives are the best source of power in any negotiation. It is easy to walk away from a deal you don’t like if you have multiple ways to accomplish the same goal. Unfortunately, we don’t always have as many good options as we’d like. In these cases, we have to figure out another way to give ourselves power.

We have found that the often-overlooked process of planning is a great source of power. By planning, I mean, a disciplined approach to preparation that allows you to think through your strategies, strengths and weaknesses, goals and alternatives before you ever leave your office.

Don’t assume that because the other party has one type of power, e.g. position power, that he or she is all-powerful. That’s giving away your power! Balance power by assessing the other parties’ source(s) of power, and then your own. While there are many sources of power, they all break down into two categories; internal power and external power. The former source of power, no one can take away from you and includes your personal power, level of self-esteem, and self-confidence.

External power fluctuates with your situation. For example, if you are retrenched or demoted you can lose position power. If new technology is introduced, you can lose your expertise power. Because the dynamics of power are so changeable, a negotiation is never dead. Be patient; the power dynamics may shift.

When negotiating with a customer who has defaulted, it is essential to remember, that the customer is the one who is in the wrong and you have all the right to be calling him and asking for your money. It doesn’t matter that this person is the director of a company and earns ten times more than you; by defaulting, he has placed himself in the same position as all the other defaulters.

By defaulting, the customer becomes exactly the same as all the other defaulting customers; someone who owes you something and is reluctant to pay it back.

Do not feel guilty for calling this customer and demanding a PTP or repayment; remember the customers account is in arrears, not yours.

A successful negotiator maintains a powerful personality and confidence, and does not get emotionally involved. Stay calm and never allow the customer to involve you in a shouting match.

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.