The key to improving delinquency and collections!
accept the excuse and permit the customer to skip the payment or offer them a payment arrangement. Pretty soon your customers learn that any good excuse or story will get them a payment arrangement. To avoid or correct this problem you need to establish a firm policy in your collections department that requires all customers to provide verification for the reason they can’t make s payment in full and on time. This verification should be produced before any discussion of a payment arrangement will be considered. For example, a customer must be able to produce a bill to verify the “higher than usual electric bill”, or a pay check stub to
verify they were “short paid” due to loss of hours, or a receipt to verify the “prescription medicine” they bought for a sick child. It is also important to establish that a payment arrangement is not automatic, just because they request one. You want your customers to understand that you will work with them if the problem is legitimate, but written verification for not making a payment in full or on time will always be required.
One a payment arrangement has been approved, the next step is to discuss and agree on the dates and payment amounts that will bring the delinquent account current again. All payment arrangements must be in writing and should also clearly explain the consequences if the customer fails to keep the promises made with their payment arrangement. The payment arrangement should be signed by the customer and the collections manager with a copy given to the customer. This approach to delinquency and collections provides a win - win solution for both parties, with clear communication, reasonable expectations, in a non-confrontational style.
Remember, delinquency is a fact of life in the BHPH business. The key to success in collections is to work with customers to get their account current again, but also to verify the reason for a delinquent payment is legitimate.
By: Mark Dubois
President of Dealer Performance and Consulting
www.dealerperformanceandconsulting.com