We understand that debt recovery can feel daunting. Fear of hurting customer relationships is one of the most common reasons why small business owners don’t pursue debts.
However, with the right care and experience, it is absolutely possible to recover debt while maintaining strong relationships with customers.
In this blog, we share our top tips for recovering debt without damaging customer relationships.
It’s important to set expectations early on in the relationship so both parties know what they’re agreeing to.
Hot tip: When should you escalate a debt for collection?
If after 90 days the invoice has still not been paid, engage your debt collection agency without delay. Your chances of recovery diminish with every day that goes by so loading a debt now is your best course of action.
Hot tip: When to make notes?
Whenever you speak to a customer about their debt, make sure that you also record any important notes that may help you better work with the customer in the future. Then, keep the notes in the same place for each customer, whether it is in a hand-written logbook or your online CRM system or accounting system. After all, you can only check your records if you made them in the first place!
Hot tip: Demonstrating active listening
One simple and effective technique is, to sum up, what they have said in your own words, and repeat that back to them. Checking in – asking “did I get that right?” – gives your customer an opportunity to clarify any details and feel confident that you’ve taken the time to understand them.
Hot tip: How can you show empathy?
Displaying empathy can be as simple as the language you use, and the tone of your voice. Try softening your facial expression and wearing a kind smile – it is amazing how this can come through in your voice over the phone. When you speak to your customer, let them know you hear them as a small business owner. Validating statements like “that sounds like a really difficult situation” and “I really feel you on that one”, if said in a genuine way, can help steer the conversation toward a positive outcome and help maintain your relationship.
Hot tip: How to keep your head in a tricky conversation?
The first thing you can do if you find a conversation escalating is to simply take a pause. Injecting a breath in the conversation helps the pace to slow down and become less reactive for everyone. Remember that if the person is angry or irrational, it isn’t personal. They are upset with the situation, not with you.
Another effective tool is to plan out how the conversation could go before you call. Write one sentence on how you can start it and 1 or 2 things you need to say to wrap it up. Accept that it may get messy in the middle and you are unable to control that, but that you will listen and do your best to adapt. A little mental preparation can help you be a skilled holder of difficult conversations every time.
Rather than focusing on the fact that the debt hasn’t been paid yet, focus on how the issue can be fixed. Flexibility is key – listen to your debtor’s situation and offer options that suit them.
Now is the time to be firm but fair. Make sure you get a commitment out of them (a firm date and payment amount) as to when they will repay the debt. Then if they don’t meet that commitment you can escalate it to your Debt Collection Agency (that’s us!) without delay.
Following up your phone call with an email to them that puts the agreement in writing, is a good idea in order to ensure everyone is clear on the expectations.
Make sure you make a note of it in your accounting or CRM system as well, so the information is tidy and there when you need it.
At EC Credit Control, we’ve got you covered. If you are finding it hard to chase down payment on a monthly basis, we can help.
You have more than enough to do than chase slow payers. We can take care of the worry for you.
Debt recovery is a skill and not everyone can do it well. You may find it uncomfortable to ask for money in case it affects the relationship you have with your customer. You might also just not have the time to set aside for ongoing debt management.
Our team are experts at having difficult conversations.
We understand the difficulties that can lead to outstanding debt so our approach is always firm but fair. Our specialists have worked with a range of personality types and reactions across all industries, while still maintaining strong relationships between our clients and their customers.
Adding an expert to your team is an easy way to ensure your customers are being handled with care while freeing up your own time to focus on growing your business.
Find out how we work, and learn more about our simple online debt collection process.
It only takes a couple of minutes to load your debts. If you’re not currently a customer, you need to sign up with us.
If you have any trouble at all, give one of the team a call on 0800 324 768.
We are more than happy to help, feel free to fill in your details below and we will be in touch.
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