(2) How To Turn A Collection Division Into A Profit Centre?

1. Organise the process

Lenders operate more efficiently if the collection area is organised. Collectors should be making phone calls and nothing else. For example, account information should be brought to collectors by support staff, who should also handle incoming phone calls, computer reports and difficult case references.

2. Stimulate new ideas

Don't brush aside collectors' bright ideas. Dismissing suggestions may trigger negative attitudes and reduce innovations. Instead, encourage ideas by asking for thought-out proposals in writing. For example, an idea for a new procedure should include: the status of the procedure and how it arrived at that point, the alternatives, opinion about the best alternative, reasons why it is the best alternative, the objective and expected result.

3. Improve collection letters

Letters should read like your favourite advertisement: short and to the point. Use two sentences per paragraph and short words; do not start sentences with "I", "my" or "our".

4. Use time limits and turn-arounds

Establish a one minute maximum for calls unless a payment arrangement is being made. Shorter phone calls mean more contacts and more chances to improve cash flow. Train collectors to use turn-around statements effectively in which they return conversations to the point when debtors begin to talk about life problems and reasons for non payment. For example, a collector can say, "We understand your problem Mr Tan. Our job is to work out a payment schedule". Have the collectors write out a list of six sample turn-around statements.

5. Handle complaints without emotion
A collector will improve cash flow by focusing on complaints. Also, train collectors to listen better by attending to the entire complaint, and to repeat the debtor's position to reach an agreement on the issue. Collectors then should identify the best alternative and create a plan for both parties.

6. Require weekly reports

To improve communications, collectors should write a brief weekly report to their managers. It should state two things - the good news about increased cash flow, and the bad news about impeded cash flow. Reports should take five minutes to write. Avoid forms that can restrict creativity.

7. Establish tolerable meeting agendas

Minimise & keep meetings short so that collectors can spend more time on the phone. Each meeting's objective should be stated as part of an agenda delivered the day before to all participants.