Show me the money! Top tips from a P.E.I. collections expert
Sara Fraser | CBC News | Posted: June 6, 2016 9:00 PM | Last Updated: June 6, 2016
'If you keep persisting, you have a better chance of being paid when the money becomes available'
The award-winning owner of a collections agency based in P.E.I. has written a new e-book: 20 Tips, Tricks and Techniques of Successful Debt Collection.
Krista Walsh, 36, president of Montague-based KC Collect!, was inspired to become a debt collector by customers of her father's home-heating business who refused to pay their bills.
"They would give him so many excuses why they couldn't pay — but they didn't have those excuses when they called him in the middle of the night," she told Mainstreet P.E.I. host Karen Mair.
Her new e-book is designed to help small and medium sized businesses like her family's. It's a collection of articles she wrote over the past decade for industry publications.
"It's not a topic that has a lot of education or a lot of publicity on it," she said, adding that she teaches seminars on debt collection.
Krista Walsh shared some of her top tips for successful debt collection with CBC News.
1. Patience
Not everyone has the means to pay their past due account in its entirety, Walsh points out.
"Most debtors are going to need your expert guidance in order to properly budget their existing debt," she writes. "You have to be patient with them as you conceive an appropriate payment plan that is going to lessen their debt load and result in payment."
Legislation binds Canadians and P.E.I. debt collections agencies, Walsh explained
"We can't threaten. We couldn't go into your house. We couldn't advise your parents of your debt, as long as you're over 18 years old."
2. Persistence
The "out-of-sight, out of mind" mentality is quite common when attempting to collect debt, said Walsh.
"If you keep persisting, you have a better chance of being paid when the money becomes available."
In her book, she likens this to water torture — advising that collectors randomly time their visits or calls "so that the debtor does not know when the next contact will be made."
3. 'The velvet touch'
The soft approach, she writes, is referred to as "the velvet touch" or "the clergyman," and urges a delinquent to confide their financial situation "so together they can devise a payment plan."
Walsh believes most Islanders who rack up debt do intend to pay it back.
"I think people always want to pay their bills but they get caught — whether it's lack of budgeting skills, or over-extending themselves," she said, adding that when she calls people seeking debt repayment, she tries to find out what the problem is and offers help.
"People think in our profession that we are threatening and we have baseball bats," she said, adding "it's not like that at all."
In fact, she said she and her employees don't yell or raise their voices.
4. Vacuum cleaner salesman
This technique is usually used when most other attempts at making contact have failed, said Walsh.
"Catching a debtor off-guard without making an appointment leads them to believe that you will stop at nothing to get this debt paid," she writes.
Often, simply the fear of a collection agent randomly visiting will result in payment.
5. Have a credit policy
It can be difficult for a small business owner to play the role of the friendly sales agent, as well as the adamant credit manager while maintaining a relationship the customer, Walsh points out.
"Unfortunately, when extending credit there is no definite way to guarantee payment. With a proper credit policy in place, this should decrease receivables and make it less likely for the business owner to turn into the enemy," she said.
Ask customers for credit references, and network with fellow companies to exchange information on delinquents.
Decide a credit limit and a repayment term, and what penalties you will impose if an account becomes past due.
Most common excuse
"I'm going through a rough time right now" is the most common excuse for not paying bills — Walsh said she hears it about 10 times a day — while her favourite excuse is "I was robbed on my way to the post office" to pay the bill.
Her book has sold more copies than she expected, she said. It is available on Amazon, Kobo and Kindle.
Listen to Mainstreet P.E.I. with host Karen Mair on CBC Radio weekdays from 4 to 6 p.m.
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