5 Tips for Effective Collections Negotiations

In any industry, collections are just part of the credit game. Even with exhaustive background checks and careful risk management policies, a certain percentage of your accounts are sure to land in collections.

Having effective techniques to negotiate with collections on your side will help minimize the damage done by these lagging accounts.

 Here are five tips to implement into your collections strategy. With any luck, these tips will help you recover more of those past due balances than ever before.

#1 – Your Biggest Asset is Information

Always go into collections negotiations with accurate information. You don’t want to scramble for the correct numbers and dates after making the phone call. Take a few minutes before speaking with any debtor to bring up the file, review your past notes, and get up to speed on everything that has happened so far.

#2 – Don’t Engage with Anger

Collection calls are difficult, and the person on the other end of the phone will occasionally get angry. It does you no good as a collector to engage with that anger and start yelling back. This reaction is only going to create an adversarial relationship where neither side wants to give an inch. Maintain your composure and stick with facts and solutions rather than raw emotions.

#3 – Truly Listen

The goal of a collection call is to, of course, collect money. But don’t just listen for when the debtor says they will be sending the payment. Instead, invest yourself in the conversation and communicate openly. Is there a specific problem that has led to the payment delay? Is a solution to that problem in the works? You’ll get a lot of excuses when trying to collect payments, but sometimes those excuses are legitimate reasons.

 #4 – Take Careful Notes

As the other person is talking, write down key points and save those notes for future conversations. This idea goes back to the first point on our list – if you have accurate notes from past calls, you can use that information to get the negotiations on track and hopefully work toward a resolution.

#5 – Make a Plan

The top priority for any collections negotiation is to create a plan to resolve the debt. Try to avoid lengthy conversations where you go back and forth about payments, but nothing gets settled.

Those kinds of negotiations waste everyone’s time. Before you call, have an idea of what an appropriate payment plan would look like for this account.

Then, as the negotiation unfolds, be flexible and adapt your idea until both sides can agree on a payment structure. And if in-house collections efforts become unfruitful, then ratchet up the pressure by sending the account to a collection agency like FMCA. FMCA has a 10-day free demand letter and full collections services and is an excellent alternative if in-house collections were to falter.

A Powerful Resource

At Furniture Manufacturers Credit Association, we are proud to serve as a powerful resource for our members. If you work in this industry, you’ll find great value in everything we offer, from collections services to community events and beyond. Want to know more about the FMCA? Just contact us for more information. We are here to serve you!