Anyone who has attended one of my talks or training courses recently will be aware of the concept of the funnel I explain. The funnel represents the activity that happens at set points on a scale. The skill is in developing a collection strategy that works for your business and not a simple one size fits all that is guaranteed to cause offense.
When I hear the phrase “Dunning Letters” it sends a shiver down my spine. I have visions of badly worded mass produced letters being fired out to “Dear valued customer” or some other nonsense that is sprayed indiscriminately at an unsuspecting customer base. OK, maybe I am a bit dramatic but have you read your “Dunning Letters” lately?
Now there is more to collections that letters, there are telephone calls made by different people with different authority levels to people with different authority levels. There are text messages, e mails, faxes – yes I know they are old fashioned – thing is there is almost a novelty factor that makes them effective in the current technological age (Most are now linked to email at this stage – but not all!). There is personal calling either by appointment or unannounced. There are 3rd party door to door collectors; there are Debt Collection Agencies and there is also a Stubbs letter service that should appear on the funnel somewhere between exhausting your own efforts and placing the account with a firm of solicitors. Then there is the Legal system and enforcement.
If that is not complicated enough you also have different types of customers, key customers, high risk customers, high margin customers, high value customers and the opposite and the ones in between. You cannot treat a high value low risk customer and a high risk low value one in the same way.
The skill of being a top Credit Professional is to be able to tailor a system that suits your business, gets the results you require and is pitched at an appropriate level bearing in mind all the factors above and the available resources at that particular point in time.
Your strategy must ensure every single balance from the highest to the lowest has a method of collection assigned to it, you do what you say you are going to do and you follow up relentlessly.
This article is denser than usual and there is a lot in it, reread it and see if you can create the type of matrix required to tick all the boxes. When you have achieved all this and when the system is operational make sure you monitor the effectiveness of each step in the process and as soon as you notice a negative shift at any stage – change what you are doing. Rewrite the procedure, turn it on its head, that way customers won’t be able to predict your next action and are more likely to respond.
Knowing what will work where and what won’t and then acting accordingly is such an important part in the Credit function and performing the role at a level of excellence.
When I hear the phrase “Dunning Letters” it sends a shiver down my spine. I have visions of badly worded mass produced letters being fired out to “Dear valued customer” or some other nonsense that is sprayed indiscriminately at an unsuspecting customer base. OK, maybe I am a bit dramatic but have you read your “Dunning Letters” lately?
Now there is more to collections that letters, there are telephone calls made by different people with different authority levels to people with different authority levels. There are text messages, e mails, faxes – yes I know they are old fashioned – thing is there is almost a novelty factor that makes them effective in the current technological age (Most are now linked to email at this stage – but not all!). There is personal calling either by appointment or unannounced. There are 3rd party door to door collectors; there are Debt Collection Agencies and there is also a Stubbs letter service that should appear on the funnel somewhere between exhausting your own efforts and placing the account with a firm of solicitors. Then there is the Legal system and enforcement.
If that is not complicated enough you also have different types of customers, key customers, high risk customers, high margin customers, high value customers and the opposite and the ones in between. You cannot treat a high value low risk customer and a high risk low value one in the same way.
The skill of being a top Credit Professional is to be able to tailor a system that suits your business, gets the results you require and is pitched at an appropriate level bearing in mind all the factors above and the available resources at that particular point in time.
Your strategy must ensure every single balance from the highest to the lowest has a method of collection assigned to it, you do what you say you are going to do and you follow up relentlessly.
This article is denser than usual and there is a lot in it, reread it and see if you can create the type of matrix required to tick all the boxes. When you have achieved all this and when the system is operational make sure you monitor the effectiveness of each step in the process and as soon as you notice a negative shift at any stage – change what you are doing. Rewrite the procedure, turn it on its head, that way customers won’t be able to predict your next action and are more likely to respond.
Knowing what will work where and what won’t and then acting accordingly is such an important part in the Credit function and performing the role at a level of excellence.