8 Proven Tips to Make Effective Collection Calls and Decrease Your DSO

Introduction

Collection calls play a crucial role in securing timely payments. However, to achieve favorable outcomes, collections teams should adopt a strategic approach in their calling efforts.

When it comes to handling these conversations, only a few collectors truly know how to do it well. 

In this blog, we’ll cover everything you need to know to master collection calling, including how to prepare for a collection call, proven collection calling tips, when to use them, and common mistakes to avoid.

Steps to Take Before Doing a Collection Call

Before you make the call, there are several important steps to take. Here’s our six-step process to effectively carry out collection calls.

Gather information: Collect relevant details about the customer’s account, invoices, payment history, and past communication.

Review account history: Analyze previous payment issues, disputes, and arrangements to tailor your approach.

Set clear objectives: Define the purpose of the call, whether it’s a reminder, discussing a late payment, or resolving a dispute.

Choose timing: Select a suitable time for the call, considering the customer’s availability and attentiveness.

Craft your message: Prepare a concise and clear script or outline for effective communication.

Anticipate objections: Think ahead about possible objections and prepare responses that show your willingness to find solutions.

Collection Call Tips

Below, we share 8 of our favorite tips for successful collection calls that have consistently improved call outcomes. By implementing these tips, you can enhance the likelihood of achieving successful collection calls, leading to higher funds collected and improved overall results.

1. Be proactive

The secret to being successful is often good preparation. But when it comes to collections most businesses pivot their collections activities around the due date and start only after the due date has passed. More often than not, this reactive approach is what might be leading to ineffective collections. 

Though, some people might think that calling a debtor and asking to clear their dues could be a straight-forward job. However, to get your customers to pay, you need to be well prepared by following the steps given above. Also, it would help if you have collections call scripts and collection email templates ready.

Following these help you set a structured approach to your communication. It is critical to make sure to prioritize your requirements, and at minimum, keep the following supporting documents at your fingertips before the call:

• Customer details
• Product/Service details
• Delinquent invoice details
• Payment terms and conditions
• Payment history

Being reactive to collections can be a costly affair for companies which is where automation comes into play. Automation can make your lives easier and help you build a proactive approach to your collections management process. With the help of automation in collections management, you can prioritize your high-risk customers with payment predictions, promise to pay, and aging analysis. It enables customer segmentation based on their risk class and offers you data-driven recommendations to customize your collections strategies accordingly.

2. Document everything

Taking notes is a critical aspect of effective debt collection. It’s essential to maintain a record of every important detail from your conversations with clients. Documenting key aspects, including customer feedback, can expedite dispute resolution if the need arises. The information to record during client conversations could encompass:

• Call time and date
• Promises made
• Planned payment dates
• Required actions
• Agreements or commitments, if any

Another compelling reason to maintain detailed records of past interactions is to enable another collector to take over delinquent accounts in the absence of the original collector. Without accessible notes, the new collector might encounter difficulties in making progress on the account. Taking notes and digitally tracking them represents a proactive approach, ensuring swift access to accurate and pertinent information.

Undoubtedly, this process can prove error-prone and time-consuming for collections teams. However, embracing a 360-degree real-time visibility dashboard empowered by advanced technologies like AI could pave the way forward. This dashboard enables access to vital information such as interaction history, notes, promise-to-pay records, and payment reminder emails in one centralized location. 

By automating these mundane and repetitive tasks, you can concentrate on devising collection recovery strategies for high-priority customers to minimize bad debt, all while streamlining the collection process for low-risk customers.

3. Demonstrate empathy 

Empathy, once considered a mere buzzword, has now evolved into an indispensable trait for every collector. It is important to remember that even if your customers fall behind on payments, they still matter, and to convey this significance, you need to exhibit kindness toward them.Incorporating empathy into collection interactions can foster a positive customer relationship while bolstering accounts receivables. 

Here are three pivotal ways to exhibit empathy:

1. Educate your customers: Invoices and billing statements can sometimes be perplexing, leading to payment delays due to misunderstandings. Taking the time and patience to explain owed amounts in a courteous manner is essential.
2. Stand as their partner: Neglecting empathy may trigger defensiveness in customers, potentially complicating matters. Counter this by approaching interactions with friendliness, respect, and kindness, which increases the likelihood of successful payments.
3. Embrace active listening: Customers often have valuable insights to share. Grasping their concerns can smoothen the path ahead. Attentive listening, coupled with collaborative problem-solving, aids in re-establishing their journey toward timely payments.

As a collector, displaying empathy cultivates an atmosphere of trust and mutual respect with your customers. When compassion is woven into conversations, interactions become smoother, thereby nurturing customer satisfaction.

4. Avoid hasty conclusions

Reaching conclusions is often easier than identifying and addressing underlying issues. However, as a collector, your role involves comprehending your customers and aiding them in resolving the reasons for late payments. This approach can prove significantly more advantageous than adopting a confrontational attitude.

Here are some tips that can assist you:

• Pose open-ended questions to get maximum insights from your customers.
• Scrutinize the issue and strive to uncover its root cause. Remember, the aim is to confirm facts, not to make assumptions.
• Delving deep into customer concerns provides valuable insights into the obstacles they face, enabling you to offer more effective support in settling payments and reducing bad debt.

However, the life of a collector involves juggling between phone calls, emails, and notes in an attempt to consolidate information. Unfortunately, this often leads to limited visibility on comprehensive customer data, encompassing payment status and risk classification. This dearth of information ultimately results in ineffective follow-ups. For instance, if a customer’s payment status remains unknown, unnecessary calls might be made. Such lack of visibility not only squanders your time but also impedes the collections process and compromises customer experience.

To combat this challenge and heighten collections efficiency, consider harnessing the power of web portal automation. This technology extracts invoice payment statuses and promise-to-pay details from A/P portals, liberating your time for devising collection strategies and enhancing customer interactions. By doing so, you can achieve superior results and conquer the issue of fragmented customer data.

Furthermore, embracing an AI-powered dashboard can provide a panoramic view of pertinent customer data all in one place. With artificial intelligence in collections management, you’ll receive real-time A/R updates, empowering you to make well-informed decisions based on up-to-the-minute payment posting information.

5. Be prepared to handle defensive customers

Not all customers are easy to deal with, and many tend to get defensive when confronted with facts or faults. Knowing how to tackle such customers is crucial. Here are some pointers to remember:

• Don’t get manipulated: Sometimes, customers might get aggressive and use it as a tactic to end the conversation. Do not take it personally and fall for the trick.
• Don’t argue back: Fighting fire with fire will eventually destroy everything. Hence, do not argue with your customers. Instead, show the customer that you care about their feelings and shift the conversation to working towards a solution that leaves both parties satisfied.
• Be prepared: It is better to be prepared and know what to say to avoid misunderstandings. Misunderstandings might cost you a customer and ultimately result in the loss of revenue.

6. Use the right tone

At times a lot of communication parameters don’t depend on what is said, rather on the way it is said. Applying the right tone of voice based on the type of account, customer profile, and use-case could go a long way in improving customer experience. Being assertive but not being rude is the way to go for an ideal collector. Here are a few things to keep in mind:

• Don’t underestimate your voice pitch: Often, the pitch of your voice has an impact on the listener. You need to use the right tone of voice and speak slowly to improve communication with the customer and ease the flow of conversations.
• Positivity is contagious: A smile is a more acceptable greeting than a frown. While handling a client, they may not see you smile but will recognize the zeal in your way of talking. To have a positive impact on your client, treat every interaction as the first call on a good day. Remember to take breaks between calls and start afresh with every customer.
• Use pauses to unpause the conversation: Speaking continuously with your customer during a call could hinder the purpose of it and also slow down the communication process. It is important to know how to use silence to your advantage. Take pauses after asking a question and wait before responding to your customer. Pause your way to a less congested conversation.

7. Prepare action items

If you want to achieve positive outcomes from your collections calls, it’s crucial to jot down action items resulting from these discussions. After all, what is effort without results?

To yield constructive results from a client call, you must actively seek out information regarding the following:

• The expected payment date and confirmation of overdue invoices.
• Documents that your client may require to facilitate payment clearance, along with the intended recipients.

Having all essential information collected and resolving any uncertainties during the call is essential. This approach avoids the need to reconnect with your client later, starting the process anew.

8. Follow-up 

When it comes to collections, consistency is the key that eventually locks in a payment. Any job left incomplete does not yield any outcomes. Similarly, a client call is incomplete without proper follow-ups. Here’s why following up is crucial:

• Follow-ups serve as reminders to your clients and keep the communication channel open for further discussion.
• Follow-ups can be used as a source to educate your clients about the consequences of being unable to pay and make your clients aware of your requirements.
• Follow-ups are a good way of gauging the next step required to get the payment, such as helping the customer choose the right payment option.

A simple way to do this is to automate dunning via emails, fax, print, and mail for low-risk customers with a single click. You can thus avoid manually drafting thousands of emails every day with ready-to-use, customizable email templates.

AI simplifies your follow-up communication by identifying the intent from your customer’s email, such as creating a payment commitment or sending an invoice. And needless to say, if you follow up well, timely payments are likely to follow.

When to Use Collection Calls?

Now that you know how to effectively conduct collection calls, it’s important to understand when to employ them. While calling is an efficient way to connect with customers and build relationships through one-on-one conversations, keep in mind that not every customer prefers this mode of communication.

Begin by prioritizing calls to new customers. This approach helps you determine their communication preferences for future interactions. Many individuals may express a preference for email due to its non-confrontational nature and quicker response time compared to phone calls. 

However, it’s worth noting that emails can also be easily ignored. For such customers, add them to your list of recipients for initial emails. If you receive no response to your emails, be prepared to make a call.

The same principle applies to customers who don’t respond to initial phone calls. Ensure you have procedures in place for follow-ups after 7 days or the second call or email. An effective practice when following up is to utilize multiple communication methods.

Never rely solely on one channel, be it phone or email, unless a client consistently demonstrates prompt and reliable responsiveness through that specific medium. If you send an email and receive no reply, make it a practice to follow up with a call. Similarly, if you call and reach voicemail, consider sending an email as well.

This approach not only helps overcome issues stemming from incorrect contact information but also increases your chances of successfully reaching a customer. By deploying both communication methods in tandem, you can harness the advantages of both calling and emailing as they were intended, optimizing your approach for the best possible outcomes.

Looking to Send Effective Collection Emails to Your Customers? Explore 21 Credit & Collection Email Templates.

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Why Traditional Customer Dunning Processes Don’t Work?

The traditional customer dunning process currently employed by many mid-sized businesses is impeding the accounts receivable (AR) process in several ways. According to PYMNTS, nearly 20% of mid-sized businesses are encountering issues with their current AR collections management system and are seeking improvements to ensure timely receivables collection.

Let’s delve into the challenges posed by the current telephonic dunning process.

Expensive

A single phone reminder can cost anywhere from $12 to $18. At this rate, the overall operational cost of making dunning calls to all overdue accounts can become prohibitively expensive.

Misinterpretation of critical information

Details exchanged during conversations can often be misinterpreted or lost if not properly noted. It’s crucial to retain this information after the call for future actions. In situations involving disputes, deductions, and overdue payments, it’s imperative to ensure that all related information is accurately documented in a centralized location.

Lack of centralized repositories

Effective telephonic dunning relies on a robust database that facilitates reaching the appropriate individuals. The absence of a centralized data repository complicates internal collaboration. In the accounts receivable process, multiple analysts handle dunning calls, resulting in scattered information exchange documents across various departments. This scenario makes data aggregation more intricate and time-consuming.

How HighRadius Can Help In Dunning

Collection Analysts are often required to contact customers for payment collections. Periodic customer dunning is necessary to ensure that the customer and the business are on the same page. The most effective mode of communication to ensure the commitment from the customer is voice calling.

Let’s take a look at HighRadius In-app calling feature that allows you to call a customer directly from the application thus optimizing the whole collections process.

Native VoIP(voice over internet protocol)

A powerful alternative for analog phone calls is VoIP technology. VoIP enables analysts to make calls using an internet connection instead of a telephonic line. With the help of this technology, businesses can save a high portion of their operational expenses that was earlier spent on dunning calls through regular phone lines. 

HighRadius’s In-App Calling function is Native VoIP enabled, which allows the analysts to make a call directly via the app with CTI(Computer Telephony Integration).

Make information retention simpler

Having complete access to customer data can make the AR collection process easier. You can easily view collaboration history, analysts’ notes during calls, call logs, call recordings, and previous conversation details on the HighRadius platform while having a conversation with your client.

Related Read: How Automation Enhances Collections and Dunning Processes.

Centralized data access

Having a single repository for all the required collections documents can save the time and efforts of the analysts. This single digital repository can hold all the account-related information such as, past conversation details, all the associated documents, bills, invoices, correspondences, call logs, analysts’ notes, and more that can help in taking further actions on that account.

Wrapping Up

Navigating collections calls can be challenging; achieving success hinges on meticulous preparation prior to engaging in these calls. 

Additionally, implementing a robust accounts receivable management system is paramount for mid-sized businesses as conventional dunning approach can lead to elevated operational costs and data disarray, consequently contributing to bad debts. 

By modernizing these practices through technology, companies can enhance their receivables while keeping costs in check.