Steve Harms

Tuesday, December 13, 2011

Collections in difficult situations

Collections proceed forward, even in situations where the backup paperwork is a bit lacking….in other words, we live in a real world and our file is not always perfect. Do we just close the file out, even though there is a past due balance from our debtor? No, we gather what we can and proceed with collections…consider the following advice.

Gather your file, even if it is in electronic form to decide the best action to take when the debtor is challenging the account as having:

• Inaccuracies in billing practices such as double billings. Examine invoicing to determine if you are able to meet debtor’s challenges head on, or whether it is time to back down a bit and settle for less.

• Gaps in time, making your bookkeeping appear disorganized and sloppy.

• Lacking in having a contract to support the invoices.

• Lacking in any contract terms which would justify the charging of interest or late fees which appear on your invoices.

• Lacking in a purchase order matching up to the invoices.

• Inconsistencies in the statements of account from the invoices.

• Missing change orders in support of invoices for extras.

• Lacking in e-mail or other formats of replies to debtor letters or e-mails making claims of problems (written communications citing problems should have responses to avoid the appearance you ignored the problems).

Collection cases lacking in good paperwork may progress as follows:

1. Make demand on the debtor for immediate payment.

2. Listen to the debtor dispute the amount claimed.

3. Respond to debtor’s claims as best as possible while remaining vague regarding backup paperwork.

4. Should debtor persist that no payment will be made without a review of paperwork he believes you possess, reconsider your position and realize you will not prevail if you go to court with the lack of paperwork.

5. Negotiate with a new game plan: to obtain the best possible settlement.

Poker players develop a feel for when to hold ‘em and when to fold’em. Collection work can be very similar, particularly when you don’t have a good hand…you lack good backup paperwork.

See Credit and Collections Kit For Dummies for many more tips!

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