Okay, let’s be honest: nobody likes to make or take a collections call. If the money hasn’t been paid yet there’s a reason, and it makes for an uncomfortable conversation whether we are the creditor or the debtor in the situation.
Yet collections is a vital area for any company, large or small. Without cash flow most businesses cannot survive. But because of the discomfort around the topic, many companies overlook this importance and the value of collections. Instead of investing in personnel to perform this duty, they saddle existing employees with this task on top of their other duties. In this situation, you often end up with overworked employees who don’t put the maximum effort into collections because they have not been properly trained or incentivized to do it.
A friend at a rival brokerage company told me that during a sales meeting, his manager was asked about collecting outstanding brokerage fees and commissions. The manager laughed and said, “The brokers will collect it; it’s their money!” Another broker at meeting pointed out that, because of the company-broker commission split structure, half of that uncollected money was actually the company’s money, not the broker’s money. “So if you want us to do the collections too,” he asked the manager, “what exactly is the company doing to justify your share?” Obviously this caused a rift between management and the sales force after this meeting. Many companies take the same approach as this manager, but it is a short-sighted approach. It puts your sales people in the uncomfortable position of negotiating with their clients for overdue payments. It doesn’t take much imagination to think of all the ways this could go wrong, potentially resulting in damage to the broker-client relationship and possibly the loss of future business.
I believe that the most successful collections strategies create a buffer between the sales person and the client. This way if the client becomes offended by the collections attempts they will not blame the sales person. The sales person can soothe any ruffled feathers with the client while hopefully helping convince them to pay. It’s a two-pronged, “good cop/bad cop” approach.
In the military they say to be a true leader you should “go to the sound of the guns.” Why is that? It inspires your troops, and it is where the battle will ultimately be won. Successful businesses will emphasize the importance of collections, devoting time and resources to establish a successful collections department and to properly train and incentivize the employees working in it.
It’s your company’s money. Why not invest in getting it back? After all, you earned it.