Commercial Collections News

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1 workshop, 1 day out of the office, 1% potential reduction in credit losses

Inaugural Editor’s Note:

I am Katie Keich, the Vice President of Commercial Services for the iA Institute. Twice each month, I will be writing and sharing substantive advice for the business to business credit & collections community.

I have over 13 years’ experience on the leadership team that scaled a small logistics franchise to a multi-billion-dollar major player in the 3PL space. I was recognized for my ability to maintain extremely low (under 0.50%) credit losses relative to our sales revenue. It was my responsibility to design and implement processes and procedures that enabled  our business to scale with minimal to no credit risk.

My articles will be based on innovative and carefully crafted ideas that made my credit & collections role a valued partner in the sales process. I invite you on this journey where I’ll bring these new approaches to the B2B world. It’s the iA Institute’s goal to teach all businesses how to make credit risk decisions with intention and purpose, while maximizing their growth potential.

If you want to learn more, visit and join us at the next Commercial Credit & Collections Strategy workshop nearest you! I will personally teach you how to implement and execute a credit policy that can reduce your credit losses by 1% or more. These proven methods have already saved companies millions in credit losses- without prohibiting increased sales growth. A very special and personal thank you to the CEO of Capital Collection Management, Jacob Corlyon, for being our exclusive sponsor for our upcoming workshop in Nashville, June 17, 2019.

Thanks for reading,

Does your customer deserve a second chance?

We all know the age-old idiom, “Fool me once, shame on you; fool me twice shame on me!”  However, is it possible that the first relationship had controllable promises and actions that could have resulted in a different outcome? Today, I’m going to talk about how to make the determination of whether a customer should be given a second chance.

When you attend our strategy workshop, you will learn that there is a major step that very few organizations take today in their lead generation process. Yes, I am telling you before you generate your sales leads there is an important step that can have a drastic impact on the success of that potential relationship, and on your ability to collect all invoices in full. You’ll need to attend the workshop to learn the secret, but what I will share now are some helpful tips to reassess whether you should or should not do business with customers who have left you holding the bag.

Let’s begin with reading through the customer notes to identify from the start of the relationship, why you didn’t get paid. What were the agreed upon terms, pricing, etc.? Did your salesperson get sign off from the decision maker in the company? Did they provide unique pricing, promises, or commitments that weren’t in line with the standard new customer process?  Did they have authorization to open an account for the business? In reviewing your sales notes, did you find anything that struck you as odd or different than your standard new customer relationship? If yes, did your organization make good on that or did you overpromise and under-deliver?

Step one: Identify the likely cause of the debt not being paid in full or at all.

The most common reason for why a customer didn’t pay previously is that they were promised one thing and received another! Whether that was a service, product, guarantee, pricing, etc., this is a surefire way for you to have an attrition and customer retention issue in the future. If you have an attrition/customer retention problem today, review these questions with your sales leadership. You may identify a quick and easy opportunity to improve in this area. It’s crucial to teach your salesforce that it’s better to under-promise and overdeliver. Educate them how to have a conversation with a potential client that sets lower expectations. A key phrase such as, “Mr. customer you will probably see speed bumps out of the gate. This is common when starting a new relationship but bear with me and we will work through those kinks quickly and make necessary adjustments. The goal for us as an organization is to build a long-standing business relationship that continues to evolve.”

Step two: Call a spade a spade.

As an organization, this is going to require putting your ego aside and including your sales management in an open and honest customer discussion. Do not ignore the elephant in the room; the customer knows they had a previous relationship with you! Talk openly and honestly about the unpaid debt on the account. In having this discussion, your goal is to validate whether the customer truly didn’t pay because of your identified problem in step one, or whether there was some other issue not captured in your notes. This step helps the customer to feel heard, it lets them know that you recognize it didn’t work the last time, and it sends the message that you want to ensure it works this time by taking the time to set clear expectations.  Side note: If the customer thought they could get away without paying you, this is where you need to hold them accountable.

Do you want to learn a really easy way to bring a customer on twice and not get paid? Simply ignore that you had a previous relationship and forget about the fact that they still owe you money! This debt will only continue to age and either your inhouse collector (or maybe it’s now with an outside agency) will continue to call and collect. If you decide you would rather credit the debt for the potential future opportunity, no judgements here! However regardless of the business decision, please make sure it’s clear whether they still owe you money or whether you are crediting the debt. Before proceeding to step three, collect the actual cash (not a promise to pay) or issue the credit. Whatever you choose, do not move forward without doing one of those two things (collecting or crediting). If you refuse to credit and they refuse to pay, do not move forward with this customer a second time!

Step three: Learn why they are willing to give you another chance.

Again, this takes putting your ego aside, but you might uncover something important in this conversation. Is the reason they want to give you a second chance because they have had services suspended with the current provider? In this step, I teach you how to identify red flags that they might be in financial distress! Did they provide you competitor invoices that show they are past due? Red flag. You laugh but I bet you more than 60% of sales folks ignore this when prospecting. Did they tell you that they just hate getting collection calls all the time? Red flag. You might be saying to yourself, well yes these are obvious red flags, however for a thirsty salesperson, you’d be surprised! Does this person mention any buzz phrases like, “cash flow is tight, so ownership wants to look at competitors”? These are all signs to pause and refer to your company credit policy for how to proceed. If you don’t have a credit policy, we need to talk because I want to hear what is holding you back from implementing one!

Do not ignore these signs because they are important reasons why you should not give the customer a second chance! This may be obvious to you as a leader or organization,  but it may not be obvious to the salesperson. Of course some salespeople do understand the compounding effect of a good versus bad customer. You know what, we will save that topic for another day!  Let’s just say that, in my experience, many people ignore these warning signs and only see dollar signs and growth potential. If you aren’t telling new hires in your initial sales training that all sales aren’t good sales, you are sending the wrong message! Listen, I love it when a new salesperson is quickly off to the races. However, this important adjustment to your training process will actually make you more successful, and the salesperson will have longer/stronger endurance if they are trained properly for the marathon. Your bottom line will thank you later, as will your customers, owners, and current/future investors. If you truly want a salesforce that’s invested in your organization’s long-term financial health and success, show them from the top down that it matters! If you don’t believe the returning customer in question is experiencing financial distress, or even worse -- bankruptcy or going out of business -- proceed to step four.

Step four: Proceed with bringing the customer back on board.

In the previous steps you have reviewed and identified their prior experience with you as a company. You have had the conversation and identified why the last relationship attempt ended with you not being paid in full. You have resolved this either by collecting the funds or by crediting the debt on the old balance. You have determined why they are interested in giving you a second opportunity at their business. Now you can continue the sales process and give this customer a second chance. You have a clean slate; I would encourage you to get all new customer paperwork. This way you can ensure you have updated contact information, address, phone numbers, e-mail address, terms, payment method, etc. Yes, I know it’s a pain but think about how much your organization may have changed in the last 60 days. The same goes for your potential/existing customers; it is always a good idea to get updated information. when rebooting the relationship. I would also encourage using these same steps for onboarding the customer and understanding their current needs.

It’s my hope that you see purposeful decision making throughout the steps mentioned above. If not, feel free to reach out to me via email at I would love to hear your thoughts. Even better, #chimein on my personal LinkedIn page where this article will be shared and published for open comments. I look forward to seeing you at our upcoming strategy workshop and helping your organization maximize revenue without increasing your bad debt!