Solicit During Collections
"We've had more sales success during collections than under many other circumstances," observes one veteran bank manager. "We try to make a positive out of a negative. When an account is overdue, an effective approach is to mail a gentle reminder in the form of a return envelope that has a postscript asking if there is an unusual situation or problem. I'll follow that up with a more strongly worded request for payment or explanation.
"If that doesn't work, I'll look up the person's payment history and call. Knowing the individuals helps a lot. Sometimes pride prevents people from immediately telling us what's wrong. I'll invite trust by saying something like, 'John, what's the problem?' If the customer's payment history has generally been good and the problem is temporary--such as being sick or out of work--this would be a good time to offer to expand the loan. The payments would be lowered, but the duration of the loan would be extended."
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Sometimes, even a seemingly hopeless case can be turned around by digging into the background and dealing skillfully with the individual. "I recently had a case where a husband and wife bought some furniture on credit. They started missing payments, and the husband lied to me and sent me a bad check. I pulled their file and found that their record had been good up to that point. I also noticed that the husband had been looking elsewhere for a mortgage, so I tucked that information away for possible future action.
"Since the wife had signed for the furniture in the first place, I decided to deal with them through her. I called her and told her that we might have to take the furniture. Pretty soon the husband came into the office, paid off the furniture loan, and finally explained that his antique shop had gone out of business. I asked him if he was interested in a mortgage, and now we're putting together a $35,000 second mortgage on their house so that they can pay off all their debts.
"The point is, if I had become belligerent, I would have lost not only the account, but future business as well. People don't go bad overnight. There must have been something good about them, or credit wouldn't have been extended in the first place."
Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.
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