Once upon a time your bank manager would, according to the television ad by the London clearing banks, pop out of a cupboard under the stairs to lend a financial helping hand.
At the time the high street banks had a gentleman’s agreement not to advertise individually on TV, but wanted more people to open current accounts boasting such innovations as cheque guarantee cards.
Obtaining a bank loan depended then on a relationship with the branch manager built up through prudent conduct of your finances.
Today, online credit scoring and risk profiles have replaced the personal judgment of the manager. But since the financial crisis, when the banks even stopped lending to each other, there have been calls for discretion to return to credit risk management.
Discretion and the personal touch are vital when small companies are promoting sales through credit, or seeking settlement of an unpaid account.
Taking on too much bad debt can cost money, but some people who seem on paper to be a credit risk are not. How can you be comfortable extending credit to your customers, effectively loaning them your money until they pay up?
You can take out credit insurance or employ a third party finance house, but this means handing over control of your credit policy to someone who doesn’t know your customers. In CCR Magazine, Brad Conwell, marketing executive at IT components distributor Entatech, last year said that this ‘can lead to a loss of business due to strict credit policies enforced by third parties who will not suffer if the customer goes elsewhere’.
Conwell pointed out that reports from credit reference agencies and published accounts are based on historical information ‘that does not tell the whole story’.
His advice? ‘Never underestimate the importance of meeting a customer face to face at the premises that they operate from.’
Evaluate what they say and be aware of what they don’t say, he suggested. What drives your customer and their business is paramount to risk management.
A similar stress on the personal touch came in a more recent contribution to the magazine from Chris Richards of private investigator London House International. He pointed out that the UK economy needs more consumer lending to encourage spending. For that to happen, he said, ‘the backlog of problem debt has to be resolved.’
Google the phrase ‘systemised debt collection’ and you’ll see that approach is taken by many firms offering debt recovery services. But Richards suggested that, while letters nag at the conscience of the ‘face to face generation’, for those who believe letters are a relic of a bygone age, this approach achieves less.
It was essential to use every method of customer contact at your disposal. For some customers, he said, a face to face approach made economic sense.
‘The young adult who has spent too much on their credit card might well need different treatment to the 50-something who is struggling with problems at work,’ he said.
Home visits made with the agreement of the debtor meant the collector could establish a rapport and guide the debtor though a resolution process before referring back to the creditor to make a payment arrangement.
Consent to a meeting is not always possible, but I was shocked at the recent shooting of two housing officers in south London who were trying to evict a tenant for unpaid rent.
At SJ Collections we have considerable experience in recovering unpaid bills while maintaining your business relationship with customers. This is reinforced by our operation on a no collection, no commission basis following a professional code of conduct to collect overdue cash. We extend to your debtor the same courtesy as if they were our own, ensuring the relationship with your client or customer is unharmed and can continue after we have achieved settlement of the account.