Credit and Collections Professionals Are Sales People Too
Author Robert Shultz

Credit and collections professionals are sales people too. Anyone in a credit and collections role must realize sales is one of their primary responsibilities. However, if you ask most collectors if they are sales people, their hair bristles.

If you are in Credit and Collections, you sell concepts to people within your company and to customers. Internally, policies, procedures and good business practices must be followed. Your sales staff must be continuously sold when a credit extension may be impossible, will require special conditions or cash in advance. Some sales people and customers must be sold on the idea that credit limits are not just advisory. They are intended to effectively manage your company's risk.

Credit professionals sell customers on the expectation that terms must be adhered to and payment prompt, even when the customer is attempting to delay.

There is a pattern that successful sales people follow to close business. Collectors who follow a similar pattern can be successful. In summary:
· Be prepared with background information and anticipate objections.
· Know your goal: What is the end game
· State your value proposition
· Ask for a commitment
· Listen carefully to all objections
· Address each objection and offer a solution
· Ask for a commitment
· Resolve any additional objections
· Ask for a final commitment
· Know when to walk
· Once there is agreement: Verify both sides have the same understanding
· Make the other side feel good about the agreement then SHUT UP!
· Document results
· Make sure all commitments are met as agreed

Collectors should try the following approach to improve their success:
Be prepared with documentation, understand the debtor's account, payment history, history of disputes, financial status etc. Anticipate possible objections and have documents and an answer ready. If you are better prepared than the debtor, that is powerful and gives you the edge!

Know your goal and "assume the sale". You should have both a primary goal and your final position planned before the call is made. For example know the amount you want paid by a given date and the amount that must be paid by a date certain.

Assume you will get agreement, "assume the sale". Have you ever met a successful salesperson who went into a sales call assuming the customer will say NO and they will leave empty handed? This will bring confidence to your voice. It will help you control the conversation.

State your value proposition. What could the "value proposition" possibly be when a collector is demanding payment. First, your company most likely has a product or service providing profit opportunity for the debtor. The deal is outlined in a contract, purchase order or other agreement. This agreement included the price and terms of sale.

If your company kept its commitments it delivered on time, at the right place, with the right product or service. The product or service was invoiced accurately, to the right location, in a timely fashion. The terms, amount owing and remit to information are clearly stated on the invoice. If applicable, the EDI transmission was complete, timely and accurate.

You met all your commitments. All the debtor needs to do is meet one commitment. PAY Completely and immediately.

That is the value. Here is the proposition. If you, the debtor, pay on time, you continue to get our product and we can make profit together. If you do not pay as agreed our shipments or service will stop. We may then refer the matter to a third party collection agency or at some point litigate. In the event we have to take either of these actions, we will report our experience to our trade interchange group of industry peers, and trade credit data bases for use by other trade creditors in making their independent credit decisions.

The value proposition is continued product or service flow, profit and creditworthiness
The consequence of slow payment or non-payment can be catastrophic. In the end, it is all about alternatives and consequences.

Ask for a commitment;
State clearly what you want from the debtor: Complete and Immediate Payment. Set an expectation. If the debtor clearly understands what you expect and why, it will focus the conversation and result in a focused and more structured response.

Then say nothing……….
The silence can be deafening. Wait as long as it takes for the debtor to speak. Whoever speaks is likely to make a concession or agree to the proposal. However, more objections may be identified.

Work through any and all objections:
Remember, debtors tend to hide behind bushes. Think of yourself as armed with a chain saw and a weed wacker and go after every bush until the debtor has no where else to hide.

Listen to every word. Effective listening can be far more important than what you say. Take notes and be prepared to address every objection. What is the root cause of the objection. Is it a customer issue or your company's issue. Some objections may be "self-inflicted". The debtor may be right!
Some objections are pure stalling tactics or may even signal serious and dangerous issues with the debtors credit worthiness. It is critical for these to be identified and dealt with quickly.

Separate the objections into two categories as you determine what actions to take:
Is the risk involved one of only delay in payment: need documents, short term cash flow issues etc.
Or is there a risk of loss. Will this end up as a bad debt: are there serious financial issues, have there been business reversals such as loss of the largest customer, fraud etc.

Determine what the "REAL" problem is. So much collection effort is focused on the symptom not the issue. Get to the REAL problem or the underlying cause for slow payments. An invoice that is past-due is a symptom. There are many possible causes, ranging from legitimate disputes, to a debtor with serious financial stress.

Ask probing questions: A probing question is one that can not be answered yes or no. Think before you speak, formulate each question to force the debtor to tell you a story.

Then listen carefully. Think of the following as an example of how asking probing questions can turn a yes or a no into a picture of what is really happening with the debtor:
D: "I can't pay you this week" (a symptom not the problem)
C: Why can't you pay me this week?"
D: "Because we are having cash flow issues"
C:What is causing your company to have cash flow issues?
D: "Our largest customer just filed chapter 11"
C: What is the financial impact on your company in the short, mid and long term?
D: In the short term we are not going to be paid a large portion of our A/R; in fact our bank is threatening to pull our credit line, in the mid-term we are seeking to restructure our bank debt and will continue doing business with our customer during the chapter 11 process. In the long term who knows.

Respond to every objection. If the debtor needs an invoice copy send one, if the debtor can not pay in full, determine the maximum they can pay immediately.

Ask for a commitment once all the objections have been discussed. Always remember your goals, what you ask for and what you have to have.

Be prepared to say NO. Know your point of no trespass.

If there are additional objections, start the weed whacking process again. Focus on the easy issues first and try to gain resolution. This establishes a record of success. From the simpler issues work towards the harder more contentious ones. Many times, the resolution of less complex issues chips away or eliminates issues that seemed insurmountable at the beginning of the conversation.

This track record of success will help if you reach an impasse. You explain, "We have made so much progress today. Certainly we can get through the rest of this together too. Remember your value proposition!

If you are at an impasse and the conversation becomes circular or is not going your way, make an excuse to take a break. After cups of coffee and a lengthy discussion this doesn't take a lot of imagination and can be quite effective. A break in the discussion allows time for emotions to subside. It provides time to regroup.

Reengage and go back through the open issues. Try to break the hard issues into chewable bites.
Example D:"Even after you issue all the credit due my company I can't pay the remaining balance this week"
C: How much can you pay or I expect at least $_____ this week.
D: Nothing can be paid this week.
C: OK let's talk about a payment arrangement. I can accept payment over then next 90 days with an interest bearing Promissory note spelling out the details. All new shipments will be cash in advance. Let's start with the first third the 1st of next month.
D: I agree to a 90 day payment arrangement. However, I can not start until the 15th of next month. I want normal credit terms on new shipments.
D: The 15th of next month is an acceptable start date but the debt must be paid in full no later than 60 days from that date. We must ship cash in advance for new shipments. I will review the situation after the first payment is received and with additional facts we may be able to negotiate resumption of normal terms. Etc.

Ask again for a commitment. State clearly what you want from the debtor and what you have agreed to do. Then pause and be silent.

Once there is an agreement: Restate what actions you are responsible for and ask the debtor to restate their actions and responsibilities.

Listen again: Many times there is a disconnection between your understanding of the verbal arrangement and the debtors understanding. Restate your understanding and clear up any differences. Repeat the process until both sides are clear and in agreement. Then it is important to assure the debtor that the agreement is good for both parties.

Then SHUT UP! Don't say another word, don't open up any issues, and don't say anything that will start the negotiation over again. Good Sales people know many deals are lost at this stage.

Document the agreement. Depending on the magnitude of the issue and history with the debtor, send a written confirmation. This could be as simple as an email or may be best with a formal letter.

Update your debtor notes and if appropriate complete a "letter-to-file" detailing the issues and agreement.

Mark your calendar to include all commitments that you and the debtor made.

Meet your commitments. Do what you said you would do on time. Follow-up with the debtor on the day you said you would. If you have communicated an expectation and then do not follow through, you have just lowered the bar and have lost credibility.

In summary: There are great similarities between the approach taken by successful sales people and collectors. Both are trying to state clearly to the customer, their value proposition or offering. They listen for objections, address them systematically and then ask for a commitment. Once the commitment has been obtained, they reassure the other party the deal was a good one. Files are updated and if appropriate they send confirming correspondence.

If collectors take similar steps to "sell" what they need and expect to both internal and external customers, results will follow.