Mark Harrison, Founder & CEO, Callisto Grand
Sam Dhingra, Director Solution Engineering, HighRadius
Buying and Implementing Technology for Treasury Professionals
An actionable summary of how collectors can work closely with their customers to recover past-dues faster during the COVID-19 outbreak
Due to the sudden outbreak, CFOs & Treasurers are focusing on stabilizing the cash flows. Reduction of DSO is one way A/R teams are able to contribute towards this goal. However, a recent Gartner survey indicates that 60% of the CFOs on the buyer end are planning to increase their DPO in order to have more available cash. In this tricky situation, how will the collection teams ensure faster recovery?
‘Dunning via collection calls’ – this is one of the legacy methods used to recover past dues, and over the decades, the success rates have remained significant. Especially, during the complete global lockdown where people are working from home, a collection call adds a personal touch, enhancing the customer relationship.
But like they say, there is no free lunch! Collection call – although a very effective dunning tool – requires more than just asking the customer to pay. Making collection calls can be awkward, uncomfortable, time-consuming and unproductive.
As a collector, you must have had the experience of listening to never-ending excuses given by the customers as to why they were unable to pay. As a top-performer, you must have a set of strategies which you use to recover from those defaulters, but will those strategies be applicable during the current crisis?
In this turbulent economy, what can you do to ensure successful collection calls? Simple, take a pivot and be prepared for the common defaulter excuses. Be ready with prompt responses and multiple options to tactfully deal with typical excuses and scenarios while maintaining healthy customer relationships.
This e-book explains how top-performing collectors deal with the most common excuses and scenarios encountered by them every day at work.
As a thumb rule, always start a collections call by introducing yourself along with your company name and confirm the identity of the receiver. Apart from this, do not forget asking about the wellbeing of the receiver. For example, ‘How are you doing these days?
How is your family keeping up during the crisis?’. Once this is done, share the relevant invoice details with the customer.
Here is a list of 6 most common defaulter excuses collectors hear every day, along with recommended strategies on how to deal with them:
Option 1: Negotiate Payment Plan, Ensure Customer Engagement, Alert the Credit Team.
Definitely, alert your credit team immediately to do an ad-hoc review and analysis of their payment trends.
Option 1: Capture Payment Commitment
Option 2: Leverage Next Order Blockage for Negotiation
For a critical invoice, leverage next order blockage to create a sense of urgency and get a partial payment upfront.
Option 1: Resend Invoice Immediately
TECH TIP: Self-Service Portal to Access All Invoices
Enable an electronic invoice presentment portal, where all your customers could view and download all relevant invoices at any time.
Option 1: Negotiate Payment Plan, Fastrack Dispute Resolution
Option 1: Capture Relevant Details, Track the Payment
Option 1: Negotiate Immediate Action, Remove Payment Roadblocks
TECH TIP: Self-Service Portals/Guest Payment Links with Dunning Emails
Technology has already transformed the collections landscape by enabling the following functionalities:
Moreover, with trending technologies such as Machine Learning and Artificial Intelligence, collections teams could leverage proactive collections approach to enable faster collections. Advanced features such as invoice-level payment date prediction and segmentation based on dynamic customer behavior enable the collectors to have a microscopic view into customer payment behavior.
AI could potentially transform collection calls by helping the collector with communication, understanding the customer sentiments, determining the probability of customer keeping the payment commitment and differentiating between false excuses and genuine issues.
Here are a few use-cases:
AI system could provide insights on the type of communication a customer is more receptive to – short, to-the-point communication versus longer conversations with small-talk.
Managers could leverage AI to figure out which collection approach (aggressive, defensive, consultative, collaborative) works for which type of customers by analyzing a multitude of successful collection calls.
AI could leverage sentiment analysis to advise and alert collectors about customer satisfaction levels while the call is in progress.
AI could advise managers on which collector would be suited best for which customers by understanding individual skillsets and strengths.
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HighRadius Collections Software automates and optimizes the credit & collections management process to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO. It provides a complete set of tools to optimize and automate the credit collections management process and enable the better prioritization of credit collections activities All the information you need (invoices, dispute information, POD, claims, tracking info, etc.) on each case is automatically presented in a collections work-space and is ready for use. Apart from the wide variety of benefits that it has, it also comes with some amazing features like CADE (Collection Agency Data Exchange), collector’s dashboard which has prioritized collections worklist, automated dunning & correspondence, dispute management, centralized tracking of notes, call logs & payment commitments along with cash forecasting functionalities. The result is a more efficient collections team that contributes to enhanced cash flow and reduced DSO.