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Mental Preparation for a Commercial Collection Call

posted on 2014-04-09 by Dean Kaplan

Elite athletes mentally visualize technique and success to improve actual performance.   Our debt collectors use a very simple technique to get better results.  Studies have shown that visualization improves awareness, mood, confidence and outcome.  We've been using these techniques with dramatic success at The Kaplan Group for years.

In house collectors typically have 2 objectives, and they are not always completely compatible:

     Maintain a positive relationship with customer leading to future profitable sales;

     Get the money that is already owed and past due.


Early in the debt collection process, in house collectors clearly do not want to jeopardize the long-term relationship with a customer.   Customers (at least paying ones) are the lifeblood of the business. 

In the training programs we have done for clients' in-house collectors and with our own collectors, we focus on several mental factors:

     Be in an Upbeat Mood

     Have a Positive Attitude

     Use a Calm Demeanor

     Have a good Tone to your voice

     Be Professional

     Be Courteous

     Listen and Understand

     Be Caring and Compassionate


It is widely recognized that having an upbeat mood typically leads to greater success in everything we do.  Individuals tend to perform better when their mood is positive.  And just as important, this seems to influence other people as well.  So, if the collector's upbeat mood rubs off on the delinquent customer that can have a positive impact on the collection process.

With respect to positive attitude, we are referring to having the belief that the debt collection call will be successful.  Success can be collecting money, getting helpful information, or building the relationship as a step in the process of eventually collecting.  This positive attitude is similar to the visualization technique for sports - the more you believe, the more likely you will make it happen.

Clearly, when dealing with customers, being professional and courteous is very important for maintaining a relationship.  A calm demeanor and a good tone are equally as important.  A tone with an edge, or outright nastiness, can draw attention away from the main issue - resolving the past due balance.  It can also cause the customer to become defensive or angry, neither of which helps the collector achieve the goals of collecting or maintaining a long-term relationship.

The last couple of items are a bit trickier.  For decades collectors have been instructed to maintain control of the conversation and not allow it to get off-topic of simply getting the invoice paid.  Many collectors work for companies or collection agencies that expect a very large volume of calls to be completed on a daily basis.  So, there is a real balancing act between these criteria and taking the time to listen, understand, and express a level of empathy if that seems appropriate to achieve your goals. 

For in house collectors, developing some level of a personal relationship with the customer is an excellent way to establish and foster a long-term relationship between the companies.  This relationship can be used in a positive way to help collect when the customer runs into cash flow issues.  At our commercial collection agency, we know a key factor in our success is often related to taking whatever time is required to listen to debtors, understand their situation, and express some empathy if that is appropriate. 

We recognize that the debt collector's approach and tactics need to change over time if progress is not being made using the attitude described above.   The change in approach is just another tool in the collector’s arsenal.

Having an upbeat mood, maintaining a positive attitude, and talking with a good tone is not always easy, especially as the day wears on or after a particularly difficult call.  Our collectors use one simple trick before each call to help them stay on track:  SMILE!  You will be amazed at how smiling helps you feel better and gives you a better attitude for the next call.

Trucking Company Profits Collecting on Past Due Accounts

posted on 2014-04-06 by Dean Kaplan

We have a client who uses a provision in the U.S. Code of Federal Regulations (“CFR”) to collect significantly more than the original balance due on accounts sent to collections. As an example, we collected over $22,000 on freight bills that were only $11,000 if they had been paid on time.

Section 49 377.203 g(1)(ii) of the CFR says “Carriers may, by tariff rule, assess reasonable and certain liquidated damages for all costs incurred in the collection of overdue freight charges. Carriers may use one of two methods in their tariffs: ….The second method is to require payment of the full, non-discounted rate instead of the discounted rate otherwise applicable.”

The key to being able to take advantage of this law is to quote prices at a gross rate with an applicable discount if the customer follows the tariff rules which include paying on time. Most of us see this approach with health care bills, where there is a gross charge and then a discount based on rates negotiated by the insurance carrier, so the consumer or carrier is only responsible for the discounted balance.

Our client has a standard tariff and then quotes discounts typically in the 20% to 55% range so that their prices are competitive. This is what customers pay if they pay on time. If they don’t, our client will send a notice that the discount has been removed and a revised invoice at the gross amount. This typically results in the customer arranging to promptly pay the original invoice amount. But if that doesn’t happen, the accounts get turned over to our agency.

Our client does not want to lose money on accounts sent to debt collections, so we are required to collect, at a minimum, enough above the original invoice amount to cover our fees so the client receives the full amount originally charged. Of course, we are motivated to collect as much as we can as allowed by this law, so the net result is that our client gets substantially more than the original invoice amount on many cases, resulting in a profit on accounts sent to our collection agency.

While we make it standard practice to send these debtors a copy of the CFR section cited above, some refuse to accept that they now have to pay more. Each time we have gone to court, we have been awarded a judgment for the non-discounted amount plus interest and costs. We explain this to debtors and encourage them to settle at a significantly reduced rate rather than going to court, but some insist on experiencing a painful lesson.

What I find most interesting is that most of the freight forwarders and trucking companies who send us accounts do not use this approach. They simply quote a fixed fee. Therefore we do not have the leverage of a dramatically higher non-discounted amount to prompt rapid, profitable settlements and big savings for debtors versus the litigation alternative.

Small Payment to Determine Integrity

posted on 2014-04-02 by Dean Kaplan


This Article by Dean Kaplan was originally published on our Blog at The Kaplan Group.

It is frustrating, or worse, when a business customer does not pay their first open invoice on time.   Perhaps something just happened at the customer's business after the credit decision was made that has resulted in cash flow problems.  But, there is also the concern that this is just a 'bad apple' that was not observable during the credit evaluation process.  When trying to collect, whether in house or when assigned to a collection agency, quickly determining which is the real situation can have a big impact on deciding how to proceed and ultimately collecting the money.

In recent articles we've talked about methods to determine if a debtor is telling the truth.  But, in a situation where a business has never paid a specific vendor, regardless of the documented circumstances, the overriding question is:  "Will this company ever pay anything?"  The only way to know is if they make a payment.

In collections, we are all concerned about establishing a bad precedent by accepting a small payment.  We don't want customers or debtors to get the impression that small payments over a long term is acceptable.  Nor do we want them to think that a small payment from time to time will prevent a vendor from taking more aggressive action.  But, at some point with a first time customer who has never paid, finding out if they have integrity is more important than the concern about setting a precedent.

When these accounts come to our collection agency, we quickly pivot to this integrity question if our standard collection efforts don't result in immediate payment.  We use 'transparency' as a way to determine if we are working with a professional debtor or a potentially viable payer.  We explain to the business owner or executive that we need a small payment just to establish their integrity, and if they can't afford as little as $100 (on smaller claims), we have to assume they will never pay anything unless forced by the courts.  We of course explain that this does not set any precedent regarding size and timing of future payments, but is simply to determine their integrity.

We have found that this technique frequently is successful in getting payments from some companies, and this does impact the collection process going forward.  Even more importantly, if a company refuses to make even one small payment, it tells us and our clients a lot about how we should handle the claim.  This same technique can be used by in house collection departments to give insight on how a specific account should be handled.


Excuse or Explanation? How to get your money!


How to Separate Fact From Fiction


Fact vs. fiction media


“We can’t pay due to cash flow problems” media


What Can You Do When A Customer Hides Behind An Attorney?

posted on 2014-03-19 by Dean Kaplan

This Article by Dean Kaplanwas originally published on our Blog at The Kaplan Group.  At our commercial collection agency, we aren't afraid to talk to attorneys. When we call a debtor and they tell us to talk to their attorney, our biggest fear is that the attorney will not actually talk to us.


Once we are instructed to talk to a company's attorney, we are no longer allowed to contact people at the company directly. All communication must go through the attorney once the company has identified who represents them and the law firm confirms they have been retained. Unfortunately, all too often the attorney will not communicate with us after this initial confirmation.


There could be a number of reasons for their lack of communication. The attorney may not have the information from their client to have an informed discussion. Or, the attorney may also be owed money by the client and does not want to invest more time until they have been paid. The attorney may be so involved in other cases that we aren't even on page 1 of their priority list and there will be a long delay before they can devote attention to the issue. In all of these situations, there is some chance that eventually we can talk to the attorney, have meaning­ful conversations, and ultimately resolve the matter.


Alternatively, the attorney may be refusing to engage as a defined strategy agreed to with their client. They realize that if they don't talk, our only option is to file a lawsuit. This can be a very effective debtor strategy if they believe the circumstances make the chance of litigation very small. For example,if the cost to litigate is high relative to the amount owed, it may not make economic sense to file a lawsuit. Or, if the debtor's financial situation is unclear, or worse, known to be poor, they know it will be difficult for the creditor to justify investment in collection litigation when the chance of eventually getting paid is highly uncertain. When a debtor is using this 'hiding' strategy, it means they have decided that in no circumstances will they consider paying anything unless a lawsuit is filed.


We find this situation very frustrating, as we know that if we can't get engagement, we don't have any chance of collecting without litigation. Somehow this is worse than being stonewalled by the debtor, as we have many different strategies to pursue in that situation. For our clients, this is an insult added to the injury of providing goods or services and not getting paid. Their customer, who they trusted to keep their payment commitment, has now spurned them in a defiant manner. Thankfully most businesses do not utilize this effective yet ethically questionable strategy.

Why We Can’t Collect From A Defunct Company

posted on 2014-03-05 by Dean Kaplan


The chances of col­lect­ing on an invoice due from a com­pany that has ceased oper­at­ing are very slim. If the busi­ness was orga­nized as a cor­po­ra­tion or LLC (lim­ited lia­bil­ity com­pany) then only the busi­ness entity itself is liable for out­stand­ing invoices. If there are no assets remain­ing in the entity then the entity has no way to gen­er­ate cash to pay cred­i­tors. We call these enti­ties “defunct.”

It fre­quently requires sig­nif­i­cant effort to prove a com­pany is defunct. Web­sites can be active for a year or more after a com­pany ceases busi­nesses, as the web­site host­ing com­pany may not be aggres­sive in shut­ting down delin­quent cus­tomers. The company’s phone may be work­ing with voice mail for many months after oper­a­tions cease. Own­ers keep the phone ser­vice so they can get mes­sages they want but ignore ones that don’t ben­e­fit them, such as col­lec­tion calls and cus­tomer ser­vice requests. So just because the phone and web­site are still work­ing does not mean the com­pany is still operating.

At our col­lec­tion agency, we’ll do exten­sive research and field work to try to prove a com­pany is defunct before we give up on a claim. We look for alter­na­tive phone num­bers, addresses, and web addresses for the busi­ness and its own­ers. We call neigh­bor­ing busi­nesses and ask if they know if the tar­get busi­ness is still open. Usu­ally they con­firm our worst fears that it is closed, but occa­sion­ally we learn the busi­ness is still open. Then it is clear the phone is not answered and mes­sages are not returned when the topic is a past due amount. At that point we know we need to take an alter­na­tive approach in the debt col­lec­tion process.

If the company's phone is no longer in ser­vice, that usu­ally is a very bad sign. It is almost impos­si­ble to keep a busi­ness going if cus­tomers can­not reach a com­pany. If we con­firm a com­pany is closed it is usu­ally cost pro­hib­i­tive to con­firm that there are no assets remain­ing. Busi­ness own­ers are not oblig­ated to pro­vide finan­cial infor­ma­tion and rarely even respond to cred­i­tors after clos­ing their com­pany – they are focused on find­ing a new source of income. The only way to force the owner to pro­vide the infor­ma­tion is to file a law­suit, get a judg­ment, and con­duct a debtor exam. Given the cost of the legal process and the low like­li­hood of recov­ery, the return on invest­ment poten­tial is not high and our clients rarely can jus­tify this investment.

A com­pany that goes out of busi­ness is not oblig­ated to file bank­ruptcy. It typ­i­cally costs about $3,000 to hire an attor­ney to file bank­ruptcy. Most small busi­ness own­ers right­fully choose to not spend money just to offi­cially bank­rupt a com­pany as they don’t get any value for this expen­di­ture. In most cases we see, bank­ruptcy is only filed if the owner is also fil­ing for per­sonal bank­ruptcy pro­tec­tion or to deal with per­sonal lia­bil­ity related to tax penal­ties and interest.

For our col­lec­tion agency, well over half the claims we close with­out col­lect­ing are invoices due from defunct com­pa­nies. In 95% of these cases, the invoices were very old before they were turned over to us. Had third-party debt col­lec­tion started sooner there would been a much bet­ter chance of get­ting some recovery.

As explained in prior arti­cles on per­sonal lia­bil­ity and pierc­ing the cor­po­rate veil, there is a chance of col­lect­ing when the com­pany is defunct if an indi­vid­ual is legally liable. How­ever, in most cases where the busi­ness was the owner’s pri­mary source of income, their per­sonal finan­cial con­di­tion is prob­a­bly very poor. We often find it can take a cou­ple years before they bounce back finan­cially and we can then col­lect on their per­sonal oblig­a­tion. Thus, get­ting a per­sonal guar­anty can have value. But, the best way to avoid not get­ting paid by a defunct com­pany is to esca­late the col­lec­tion process sooner and get to them before they go out of business.

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