cpa nov 2009 online version

Debt Recovery – How to Recover Account

Payments … Quickly, Efficiently and Painlessly

or .. The Early Bird, Shrek and the Mosquito.

Michael Toddhttp://opsgl.com

2

In your folder

• Evaluation sheet:– Please fill in at the end of the session.

• Course manual:– Detailed manual of the entire program.

• Slides:– A copy of this PowerPoint presentation.

3

Course outlineIntroductionPsychology of debtThree fundamental principlesTelephone technique

Tea Break

ProceduresPolicyNew customersExisting customersOngoing proceduresTrouble-shootingYOUR Case Studies, Questions Wrap up

4

How to select yourself forThe Role Play from Hell

5

How to select yourself forThe Role Play from Hell

• Leave your mobile phone on. • Arrive late today.• Outrageous/different/very colourful clothing –

presenters choice!• But the one that will absolutely guarantee that this

role play is yours is to …

6

It’s all about Planning

Make It Easy For Your Debtor To Pay You and Hard for them not to.

You have $3,000 in your own, your personal bank account. Bills to be paid are $3,500.

In Column 3 of the handout, tick the item/s that you will NOT pay.

make it easy for your

customer to decide.

NOTE: No part-payments allowed.

7

Do You Have Written Down Credit And Collection Procedures?

8

Do You Know Your Own DSO?

http://opsgl.com

9

The Bath TubTurn the taps off first!

10

The basics

Today is about “Slow” Debt NO T “Bad Debt” PLAN AHEAD

H L Menkin (outspoken social commentator early 1900’s)

... “to anybody who might send something critical to me - this is my response. I am sitting here in the smallest room in my house with your letter of criticism before me. Soon - it will be behind me.”

11

The basics

• Emails (stealth mode)

• Statements (stickers?)

• Credit Cards• A “Pay By” date on invoices• Put BSB details on invoices• Email SMS’s (from computer to mobile phone)

Today is about “Slow” Debt NO T “Bad Debt” PLAN AHEAD

H L Menkin (outspoken social commentator early 1900’s)

... “to anybody who might send something critical to me - this is my response. I am sitting here in the smallest room in my house with your letter of criticism before me. Soon - it will be behind me.”

no escape

12

Sending Text Messagesfrom your computer to mobile phone

http://voipbusterpro.com

http://www.smsglobal.com.au

Only 6 cents but replies will come back to a mobile

10 cents and replies received as an email

13

Why people really DO pay(7 influencing factors)

14

Why people really DO pay(7 influencing factors)

1. Need. (Electricity, Food …)

15

Why people really DO pay(7 influencing factors)

2. Honesty, appreciation and obligation

16

Why people really DO pay(7 influencing factors)

3. Conscience (Cheques in the drawer)

17

Why people really DO pay(7 influencing factors)

4. Embarrassment (Child Centre)

18

Why people really DO pay(7 influencing factors)

5. Fear (Of The Unkown)

– Directors Report – “What will they do next” – Credit Rating – Bluff Plaint – “revert to policy” – “consider what other alternatives” …

19

Why people really DO pay(7 influencing factors)

6. Physical Safety.

20

Why people really DO pay(7 influencing factors)

7. The “How Do I Get Rid Of You” factor

21

Why people really DO pay(7 influencing factors)

• Need.

• Honesty, appreciation and obligation

• Conscience• Embarrassment • Fear

• Physical Safety • The “How Do I Get Rid Of You” factor

22

Who would you pay? (Sheila. B. Ritemate or Peter Perfect?)

On 15 February, you have exactly $1,000 in your bank account. You only have two creditors - businesses you owe money to.

Sheila B. Wrightmate Peter Perfect

Dd

Both Creditors Supplied stock – 01 JanuaryTrading Terms – 14-Days

These are the four options available to you. What will you do?

A: pay Sheila and Peter $500 eachB: pay Sheila $1,000 to finalise her bill.C: pay Peter $1,000 to finalise his bill.D: pay no-one - leave the country!

23

Who will you pay? (Sheila or Peter?)

A: pay Sheila and Peter $500 eachB: pay Sheila $1,000 to finalise her bill.C: pay Peter $1,000 to finalise his bill.D: pay no-one - leave the country!

Your options again...

24

Six reasons behind all excuses

25

Six reasons behind all excusesDISPUTE – unhappy – query – false.

CARELESS – forgot – didn’t understand.

DISORGANISED – their own books are in a mess.--------------------------------------------------------------------------------

NO MONEY – the intent is there but not the cash. --------------------------------------------------------------------------------

UNCONCERNED – not bothered – too busy.

DISHONEST – want to use YOUR money to run THEIR business.

3

2

1

26

Survey results

1. They had clearly defined rules. (They knew who would do what and when that was to be done.)

2. They always did what they said they’d do. (Their word was their bond – deadlines, quotes, collection follow ups. Customers respected this.)

3. They were quick to respond. (All disputes, queries, problems were addressed promptly.)

4. They were in frequent and friendly contact with their customers (making them very hard to ignore).

27

‘Volunteers’ #1

The envelopes.• Envelope 1a = Creditor #1• Envelope 1b = The debtor• Envelope 1c = Creditor #2

The situation:• $3,000 owed by the debtor. • Creditor #1 phones to collect payment.• Creditor #2 phones to collect payment.

28

The three golden rules

• Start early.

• ALWAYS be the good guy.

• Be VERY hard to ignore.

29

Rule 1. Start early

Know what you really want and will enforce.

Are your payment terms as tight as they can be?

How soon do you send out invoices?

Decide WHO you want to look after the accounts.

Switch the onus from ‘Can I’ to ‘Please don’t’.

Set rules carefully – write them down.

Tell everyone – new and existing clients.

Chase any overdue accounts within a few days of becoming due if not immediately.

30

How NOT to get paid A True Situation

The FactsA typical School Term is 10 weeks.

Collection ProcessFees sent out during the second week of term. 8 weeks to go before end of term

Parents have 30 days to pay. 4 weeks to go before end of term

Headmasters Letter sent out requesting payment within 14 days. 2 weeks to go before end of term

Term 1 fees

Term 2 fees

31

A very simple, yet very powerful, phone technique

Watch, Listen,

Observe.

32

Rule 2. ALWAYS be the good guy

33

Rule 2. ALWAYS be the good guy

Always blame someone/something else.

‘Thank you for telling me that.’

Write the bad news,

speak the good news.

Assume innocence.

Be surprised if payment’s not on the way.

Set up a collection hierarchy:• information gatherer. • problem solver• decision maker.

34

Rule 3. Be VERY hard to ignore

35

Rule 3. Be VERY hard to ignore

Make collections systematic

– never miss a week.

The catThe 9 year old

Anything inside one of your envelopes

Phone, Fax, Email, Letter, sms, Business Cards, Statements if you HAVE to

Phone about ANYTHING ….

Handwritten plain envelopes

Write to the home address on a Thursday

36

You’ve just got to get their attention

37

38

39

You’ve just got to get their attention

Use coloured stationary for Statements

Handwritten envelopes

Hi John,

Please contact me.

Cheers, Fred.

Handwrite on selected Statements

Highlight overdue amounts

40

About me. About you.

• About me.

• About you.

• What do YOU personally want to get out of today?

– A system?

– Phone skills?

– A solution to some problem accounts?

– Something else?

41

Any Tips or Suggestions?

Email received from partner in Accounting Firm

Client has paid part of this Invoice (total was $9,800 + GST). Jane is not happy with amount, we have provided a break-up of our time & costs & invoices for 2 disbursements within the invoice.

Client has only paid what she thinks the wk to be worth & we are still negotiating. Any tips or suggestions gratefully received.

42

Good Cop – Bad CopOur Reply

Initial Thoughts. Are you 100% happy that the charges can be justified? If there is any doubt at all, a reduction of some sort could be considered.

Suggested Strategy. Good Cop – Bad Cop is always a good ploy. In this case, a third party (Karen or Anthea) who has absolutely no knowledge of (or emotional connection with) the work that was done would be the best person to contact the client. The client is more likely to be very frank about their concerns with an “uninterested” third party. There can be no argument about what was or wasn’t done, simply because, they don’t know!

Ignorance (of the work done) is Power. What a third party can do that you cannot do is ask for more and more details, more and more criticism, without going into defensive mode. Simply because - the third party won’t start defending the work. They can’t. They don’t know what was done! Nor do they need to. They do, however, need to get the information. All of the clients “venom” if you will. Once armed with the knowledge, a sensible, logical and commercially realistic decision can be made by the person (you) that did do the work.

Just a thought. But it normally works. Simply because, no emotion or pride in work done is involved. Just facts and information gained from which a logical “next course of action” decision can be made. Hope that helps. Let me know?

43

The First Telephone Call

The first phone call to a good client can “make” or “break” your relationship.

Is your tone accusatory, friendly, chatty, firm?

What do YOU say after

“Good morning ….”

44

Good morning Mrs Jones.

It’s Gwen Iveer from Camelots. I’m doing the accounts today.

It looks like we haven’t got payment for last month’s invoices yet.

Has it already been sent or is it on the way?

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

But, if THIS is how you feel

DON’T PHONE!

The First Telephone Call

45

Telephone Skills

Core Telephone SkillsUse body language.Listening.Allowing debtors to “save face”.Taking Notes.Always get a ‘Here By’ date.

Core Telephone RulesNever assume a reaction Never use emotion.Never leave more than two phone messagesIf you know the outcome before you call, don't call, write.

“I know. I know!”

46

Telephone Skills

For debtors with a disputedon’t arguespeak softly‘Thank you for telling me that’'I see ...''Is there anything else'

Sneaky TricksPhone about anything else.Phone, get distracted, leave a message

Don't feel like phoning?Then don't! Write, text message or get someone else to call.

47

“I can’t afford the full amount”

If an account customer advises you that they can’t afford the full amount owed, would you say or do anything different from any of the following?

• Well, how much CAN you afford?• Come in and we’ll talk about it.• I need you to pay at least half. • I need the full amount now, nothing less will do. • Can we come to some sort of an arrangement?

48

The new customer procedure

49

The new customer procedure

• Marketing brochure – include Trading Terms– About the business.– About the people.– Services offered.

• Agreement document – include Trading Terms– Customer information sheet.

• Welcome letter – include Trading Terms– Offer direct debit, credit cards …

• Invoice sent – include Trading Terms– With a specific ‘pay by’ date.

50

Tidy up the existing situation

Do not action any accounts until they have all been classified into one of four categories:

1. The untouchables.

2. For special consideration.

3. Just due for payment.

4. Long overdue for payment.

51

Ongoing Collection Procedures

• Page 11 of the handout.• The Coffee Wholesaler

52

53

OnTime For Accountants

http://opsgl.com

The OPS Global Blog

$199 (Website price $399))

54

Summary – why this approach works

• You work out what you want.• You work out how you’re going to get what you want.• You tell everyone concerned.

• You only review those accounts that need to be reviewed each week.• You’re nice about it, all the time.• Someone else does the ‘grunt work’.• You assume innocence until the debtor ‘proves’ otherwise.

• Every action taken is a ‘positive’ collection action.• If you say it, you do it.• Debtors are never allowed to forget about your account.

55

The Bullring

Open discussion

Time to: • Raise something that may

not have been covered today.

• Discuss a particular “challenge”.

• Expand on any matters discussed earlier.

• Ask a specific question.

56

It’s time forThe Role Play from Hell