solken.com - Collection Philosophy

Collection Philosophy

COMMERCIAL & RETAIL

Commercial Collection Philosophy: Letters don’t collect, people do

Solberg & Kennedy has a five step process we utilize on each and every account placed. Many agencies decide on the collectability of an account in the first 10 seconds. We take longer which translates into higher recovery rates for our clients.

1. Profile the debtor

a. Who are the principals?

b. What other business are they involved with? In what states?

c. How is the company structured? A corporation, sole proprietorship Limited Partnership and so on. Are they active entities? In what states?

d. Do they have previous BK’s or current tax liens and Judgments pending?

e. Who do they sell to?

An accurate and timely profile of the debtor will determine the next course of action. Be aware that each account has unique circumstances.

Professional deadbeats can be spotted by their past and present behavior and require a specialized approach.

2. Plotting the next move

a. Find the pressure point.

b. Contact principal, not A/P, see if they’ll come to the table.

c. If not, apply pressure.

The pressure points could be…

Credit score

Potential exposure with other partners

Exposure with current customer

Legal action

Cut off supply

Exposure to Spouse

Exposure to Parents

Pending financing

3. Make phone contact - deftly handle the stories and stall tactics.

Have you heard this one before? “I’ll pay you as soon as…”

Debtor: I’ll pay you as soon as my financing comes through.
Collector response: Fine, give me some offer of proof. (I.e. letter of intent/financial institution, verifiable financials, etc.) If they refuse or stall then you know it’s no more than an excuse and they don’t plan on paying.

Debtor: I’m getting financing in a few weeks
Collector response: I’ll fax over a Personal Guarantee. Show good faith or down payment $.

Debtor: “I’ll call you back later.”
Collector response: “When exactly? If you don’t call by that date I am sending this account to collections.

Debtor: I dispute part of the bill.
Collector response: OK, what part DON”T you dispute? (get them to pay the undisputed amount and resolve the rest after partial payment or expose the debtor as a game player)

What if the debtor won’t respond/answer/return phone call?

First, find an alternative phone #.....

a. Principal’s home

b. Other branch office

c. Other state office

d. Corporate counsel’s office

e. Principal’s cell

Secondly, try leaving an “attention getting” message

a. Change your standard message and tone of voice.

b. Let them know consequences of not paying.

c. Reference what you’ve learned during profiling.

Do not send another demand letter, it weakens the collector’s position. Instead, set a deadline and follow through with it. Allowing more time tells the debtor the collector not serious.

4. Pay, Sue or close

a. The debtor pays if full or makes partial payment.

b. The account is determined as suit worthy or not suit worthy. If suit worthy, client is asked for permission to sue. If not, client is informed of collectors opinion and asked how they would like to proceed.

c. Account is closed as Balance in Full (BIF), Settlement in Full (SIF), Partial Pament Arrangement (PPA) or simply closed.

5. Follow up with client

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