Collections and accounts receivable professionals will develop more confidence in their abilities and rank ahead of their peers by following the ASK method.
What’s the ASK method? It stands for Attitude, Speed and Knowledge. And it’s a tried-and-true strategy that Pam Fagan, president of Audit Business Services, trains her employees and clients to master.
Fagan shared the nitty-gritty details of the ASK method during a recent Premier Learning webinar, Today’s Strategies for Better, More Effective Debt Collections.
“Attitude means saying to yourself, ‘I will collect this debt. Today,'” says Fagan.
Instilling this attitude in collections and A/R employees begins in training sessions. Have employees repeat the mantra, “I will collect this debt. Today!” three times. Stress that if they don’t believe it’s true and possible before they pick up the phone to collect a debt, it’s almost certainly going to be a waste of their time.
“Always be proactive in your invoicing and collection practices,” Fagan stresses. “Expect your customers to pay on time and in full for your goods and services. You should involve Sales personnel in your training sessions” and strategy meetings so they can communicate to customers what your company’s policies and expectations are.
Bottom line: No matter how many times you’ve tried collecting or how many months a debt’s gone unpaid, start with the attitude that you’re going to succeed today.
Need to collect fast? Don’t let it wait one day
Once the Attitude is adopted, focus on Speeding up efforts to settle an account. Keep in mind the potential collectability of an outstanding debt:
- You have a nearly 90% chance of repayment if an account is one month late.
- That rate drops to just under 70% once the debt hits the three-month mark.
- At six months, your odds of getting paid drop to 50/50 (collectability is 51%).
- And you’re at about 20% at the one-year mark.
Collections and A/R teams need to follow up on before payment is due. Contact is essential on the first day a payment is late, Fagan says. Time is of the essence to collect within the next month to three months as the above figures show.
And finally, knowing your customers’ past habits is key. “A customer that pays up to 30 days past due may tell you it can’t pay you until it gets paid, and that’s at the end of the month. That’s a pattern you need to recognize and adjust to,” says Fagan.
It takes reaching out to customers on a regular basis to understand what’s going on in their business. Is there a stressor that’s causing a customer to stretch payment? You won’t know unless you seek the Knowledge needed to settle an account.
