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"I start out positive, and I never give up," says Joanne Swyers, CCE, corporate credit manager for Miller Paint Company (Portland, Oregon), "I have an incredible tickler file." Swyers has found success in collections with a four-step process:

1. Basic reminder. The first contact is a basic reminder letter sent out two weeks after the due date. (Terms are net 25th.) The letter says, in summary: "We didn't notice a payment on your account last month. Many customers appreciate a reminder. Your past-due balance is (amount)."

2. Personal call. If there is no response to this, she places a personal call to the customer two weeks later. Her conversation will go along the lines of, "Hi, John. This is Joanne Swyers with Miller Paint, and I need to touch base with you on your account with us. I'm showing that you're a month past due, and I need you to help me by clearing this up."

If you fail to pay on time, you will continue to hear the sound of my voice over and over.

-- Joanne Swyers, CCE

Responses generally fall into four categories:

The vast majority of customers respond willingly and pay the amount past due.
A few report experiencing some cash-flow problems, in which case Swyers is usually willing to set up a payment program in which the customer pays half now and arranges to pay off the rest over a specified period of time.
A small number of customers may report that there were problems with the paint. In some cases, the complaints are legitimate. In other cases, the customer is simply trying to stall for time. In either case, Swyers will ask the customer to estimate the dollar amount of the complaint. Then she will ask the customer to remit the amount past due (minus the contested amount) immediately, and she promises to have the sales department investigate the quality complaint. "I then follow up with the sales department every two weeks until the problem is resolved," she adds.
A very small number of customers (usually limited to a very few new customers) will respond with: "It's our policy to pay our suppliers at 60 days." Swyers responds in two ways: First, she reminds them that if they are past due, they are subject to interest charges. Then she adds, "If you fail to pay on time, you will continue to hear the sound of my voice over and over." "In almost all cases," she says, "when customers become aware of my expectations, they move their payment patterns up."

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3. Second call. If there is still no response or cooperation, Swyers places a second call at around six weeks past due, conveying the following message: "It is urgent that you get money to us in the next 10 days so that we can maintain an open account for you."

If the customer has not responded by 60 days past due, Swyers begins holding orders.

Often, accounts get to this point when Swyers has been having to deal with customers' answering machines. "If a customer doesn't respond to my messages, I send a confirming letter," she says.

"If the customer still does not respond, I leave another message," she continues. This one is along the lines of: "It is urgent that we talk. Ignoring me won't make the situation any better. I want to resolve this with you, so I hope you'll return my call. I hope I won't be forced to turn this over to a party tougher than I am."

4. Third party. In most cases, once an account becomes 120 past due, Swyers will turn it over to a third-party collection agency. (The exception is if a customer has been working with her all along to get an account paid off. In this case, Swyers will continue to work with this customer past 120 days.)

While she selects collection agencies based primarily on geographical location, she sub-selects them on the basis of their approach. She then sends selected accounts to different agencies, according to what she knows about the accounts. One agency, for example, tends to be very economical and doesn't "sink its teeth in deep." Swyers sends this agency the accounts that she feels will respond promptly to third-party contact. Another is more expensive, but is a lot more persistent and "never lets up." She sends this agency the accounts that she feels will require this level of persistence.

Before selecting a collection agency, though, she asks them to call her and "role-play" how they communicate with customers, so that she can get a firsthand idea of how they will communicate with her customers.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.