By Steven Gan, CPA, CCE
I was having a discussion the other
day with an associate of mine and this subject came up. To be honest
with you, I really don't know the answer to this question. In over the
30 years I've been in the collection business, I've worked with hundreds
of people and have observed the collection techniques, styles,
approaches, and psychology of both genders. However, let me take a
moment to outline some of the differences of each that I've observed and
see what you think.
1) It appears to me that my female
colleagues have a tendency to listen more carefully, take clearer notes,
and wait for a pause in the conversation before responding to a debtor.
This is especially important since before we can grapple with the
reasons why a debtor can't or won't pay, we need to at least understand a
complete picture of the situation.
2) I have sometimes observed
some of my male colleagues of being a little bit too aggressive. Rather
than listening to the debtor's reasons for non-payment, there may be
some impatience to put everything aside and get right down to "when
payment will be made and how much". When this kind of situation occurs,
the collector may be missing an opportunity to just let the debtor "get
something off of his/her chest", which could then make them feel better
and ready to communicate on the matter.
3) I think when it comes
to dealing with a very difficult debtor, it really comes down to case
by case. Sometimes a male debtor who is upset will calm down more by
speaking with a woman. The converse is also true in that an irate male
debtor may feel more comfortable speaking with a male collector. There
are many factors involved such as the tone of voice, the speed of the
speech, and the ability of the collector to establish a level of
comfortability in communicating together.
4) It seems to me that
female collectors do not get quite as frustrated when having to
follow-up and stay after debtors who break promises to pay. They have a
tendency to accept the follow-up process as more or less part of the
job. However, I think that male collectors may channel their frustration
into an imparting sense of urgency that the debtor fulfill their
payment obligation.
5) I am going to go out on a limb here with
this observation but I believe that male collectors just edge out their
female counterparts when it comes to negotiating techniques, especially
when the male collector is dealing with a very seasoned male business
professional (debtor). When I use the term negotiating techniques, I am
referring to the ability to stay focused against the reasons that a
debtor may use to maneuver out of the payment obligation.
6) At
the same time, I think that female collectors can be more creative when
it comes to providing or suggesting payment routes that will help to
resolve a debt situation in which the debtor has the will and volition
to pay, but not the capacity. I remember one very creative female
collector who found a buyer to purchase the debtor's inventory as a way
to pay off the creditor's claim.
7) This one may also be a
little bit contentious but I've found that female collectors are more
open to changes in the collection system and just wanting to learn more
and advance higher up into the profession. As you may know, the
collection industry is one of the fields that employs a very high
percentage of women.
8) Point (7) leads me to the feeling that
women in our industry tend to stay in the industry much longer and work
at one company for a greater period of time than their male
counterparts.
Perhaps with the above points I might be leaning
towards women as better collectors but as this really is very
subjective, I would greatly appreciate hearing your thoughts on whether
women or men make better debt collectors.
All Rights Reserved
Tuesday, March 11, 2014
Monday, May 27, 2013
Why Accountants Are Afraid to Collect From Their Own Clients
Last week I had the pleasure of speaking about credit and collections at
one of the local Illinois CPA Society Chapters of which I'm a member.
There were about 30 CPA's present and most are either operating their
own small CPA offices or are working at small to medium size CPA firms.
As a CPA myself, it's a little unusual for me to be working in the credit & collections field since most CPA's are inclined to work in the areas of tax, auditing, financial analysis, cost, budgeting, and estate planning. As such, most CPA's are a little curious about me and whenever I have a chance to speak to a group, I usually get a descent crowd to attend.
At the start of the seminar I asked the group of attendees to raise their hands if they have any clients that are outstanding and not surprisingly almost everyone of them sheepishly raised their hands. I then asked them for the average length of time that their clients are past due and I was totally blown away by the answers.
For the most part many of the attendees told me that they have clients with unpaid fees well past two years from when the services were performed. I asked them how they could let these clients become so delinquent and following below are a list of the most common reasons that I would like to share with you.
1) We CPA's often accept the idea that we may not get paid for our services even when we know that from the start the client is having terrible cash flow and other financial issues.
2) We very rarely ever think in terms of confirming the credit worthiness of our clients. Perhaps we are too focused on just putting together our clients' financial statements and tax returns without going below the surface of what the numbers actually mean.
3) We are very hesitant to get too aggressive with our clients' past due bills because we are concerned that an aggressive approach, including 3rd collections, will become known in the business community and will impact our firm's reputation.
4) Some times when invoices are sent late and the client baulks at the cost, it's better to just let it sit for a while until the next engagement and try to couch the unpaid fees into the new fees (yes, I was told this by one person and the room fell silent).
5) Just don't have the time, energy, and confidence to communicate clearly with some clients over certain fees and best to write them off.
When I heard their reasons I explained that CPAs must recognize that their firms are also businesses that need to be properly managed. And a key part of that is establishing and executing an effective credit and collection policy that sets out the the guidelines for determining creditworthy clients and procedures for collecting past due accounts in a professional and effective manner.
CPAs also need to learn how to communicate their value in a way that shows clients that what they are paying for is worth it. Failure to improve an ineffective credit, billing, and collection process will hurt their firm’s revenue, cash flow, morale, and in the end their own viability.
As a CPA myself, it's a little unusual for me to be working in the credit & collections field since most CPA's are inclined to work in the areas of tax, auditing, financial analysis, cost, budgeting, and estate planning. As such, most CPA's are a little curious about me and whenever I have a chance to speak to a group, I usually get a descent crowd to attend.
At the start of the seminar I asked the group of attendees to raise their hands if they have any clients that are outstanding and not surprisingly almost everyone of them sheepishly raised their hands. I then asked them for the average length of time that their clients are past due and I was totally blown away by the answers.
For the most part many of the attendees told me that they have clients with unpaid fees well past two years from when the services were performed. I asked them how they could let these clients become so delinquent and following below are a list of the most common reasons that I would like to share with you.
1) We CPA's often accept the idea that we may not get paid for our services even when we know that from the start the client is having terrible cash flow and other financial issues.
2) We very rarely ever think in terms of confirming the credit worthiness of our clients. Perhaps we are too focused on just putting together our clients' financial statements and tax returns without going below the surface of what the numbers actually mean.
3) We are very hesitant to get too aggressive with our clients' past due bills because we are concerned that an aggressive approach, including 3rd collections, will become known in the business community and will impact our firm's reputation.
4) Some times when invoices are sent late and the client baulks at the cost, it's better to just let it sit for a while until the next engagement and try to couch the unpaid fees into the new fees (yes, I was told this by one person and the room fell silent).
5) Just don't have the time, energy, and confidence to communicate clearly with some clients over certain fees and best to write them off.
When I heard their reasons I explained that CPAs must recognize that their firms are also businesses that need to be properly managed. And a key part of that is establishing and executing an effective credit and collection policy that sets out the the guidelines for determining creditworthy clients and procedures for collecting past due accounts in a professional and effective manner.
CPAs also need to learn how to communicate their value in a way that shows clients that what they are paying for is worth it. Failure to improve an ineffective credit, billing, and collection process will hurt their firm’s revenue, cash flow, morale, and in the end their own viability.
Monday, March 11, 2013
Learn How to Forward Claims
Allow me to vent! This is to all overseas agencies who may not know how to forward claims to other overseas agents.
Firstly, two claims were placed with me from two overseas agents today against two commercial debtors in the Chicago area.
When
you forward a claim, the first thing you need to understand is that you
have to have all the proper documentation that will support the claim.
In other words, do I have to tell you that you need to have the invoices
and not just a statement of the charges representing the balance due?
This is standard operating procedure.
Besides
the invoices, I would like to have a copy of the contract, purchase
order, a shipping document, and any other document that will allow me to
communicate clearly, intelligently, and persuasively to the debtor. I
do not want to stop and say to the debtor, "I do not know and have to
confirm with the creditor".
Next,
why did you send me a bunch of emails in your home language knowing
full well that neither I nor my staff cannot read your native language,
and which is rarely spoken here in the US. Is it not a waste time to
write back to you, and ask you to translate the main points? This should
be common sense.
Before
you forward the next claim overseas, look at everything carefully you
have received from the creditor and make sure it is complete so that the
overseas agent can quickly and efficiently handle the claim on your
behalf.
Friday, February 22, 2013
How a credit manager can innocently thwart a good sales opportunity
One of my clients has a credit manager who is a very nice, honest, and
forthright individual. I have known this credit manager for the past few
years and from time to time I am asked to come out and assist him with
some consulting project or issue.
Last week when I was out there having a meeting with this credit manager, one of the sales administration staff brought over a new account that needed to be approved for credit. The new customer credit application had been filled out and the D&B report had been obtained as backup to the application for the credit manager's review. The credit manager showed me the company and when I saw the name I said, "Wow, congratulations on getting this company as a new customer, they are wonderful to have"!
The credit manager looked at me strangely and told me to "take a good look at their D&B report and to note that they have some law suits pending against them". I read them but also pointed out that this company, as a global corporation, like many other multinational companies is going to have several business transactions that may end up in court. "It's par for the course", I told him. I also pointed out that according to the D&B report this company had a $1 million credit line with a Paydex score of 70 and that in view of the request to purchase about $2,500 in parts from his company, I feel that they are not a credit problem. In addition, and more importantly, from the point of future business with this very well known company, best not to rock the boat.
The credit manager however was adamant about the law suit situation on the credit report by asserting that, "large or small, law suits are a warning sign and in accordance to our credit policy, we have to treat every company the same and in this case we'll have to request cash in advance". I very gently mentioned to him that the beauty about credit is that every company, like every employee, needs to be evaluated on a case by case basis. If the new account was a very small company, with a very low Paydex score, with several pending law suits, then I could certainly understand selling on a cash in advance basis. However, when a well known publicly traded company with a $1 million credit limit is only requesting $2,500 then I think we can set aside the law suit idea.
The credit manager sort of agreed and also looked a little awkward. He mumbled something to me about other accounts that may have to be reconsidered.
As a credit manager myself who is always on the look out for any details on a customer that could be red flags, I have a mantra, "Do nothing unwisely to impede a sale". In other words, knowing how difficult it is to get new customers and understanding the challenges in retaining customers, a credit manager should never do anything unwisely or unfairly that would impede the sales process.
Last week when I was out there having a meeting with this credit manager, one of the sales administration staff brought over a new account that needed to be approved for credit. The new customer credit application had been filled out and the D&B report had been obtained as backup to the application for the credit manager's review. The credit manager showed me the company and when I saw the name I said, "Wow, congratulations on getting this company as a new customer, they are wonderful to have"!
The credit manager looked at me strangely and told me to "take a good look at their D&B report and to note that they have some law suits pending against them". I read them but also pointed out that this company, as a global corporation, like many other multinational companies is going to have several business transactions that may end up in court. "It's par for the course", I told him. I also pointed out that according to the D&B report this company had a $1 million credit line with a Paydex score of 70 and that in view of the request to purchase about $2,500 in parts from his company, I feel that they are not a credit problem. In addition, and more importantly, from the point of future business with this very well known company, best not to rock the boat.
The credit manager however was adamant about the law suit situation on the credit report by asserting that, "large or small, law suits are a warning sign and in accordance to our credit policy, we have to treat every company the same and in this case we'll have to request cash in advance". I very gently mentioned to him that the beauty about credit is that every company, like every employee, needs to be evaluated on a case by case basis. If the new account was a very small company, with a very low Paydex score, with several pending law suits, then I could certainly understand selling on a cash in advance basis. However, when a well known publicly traded company with a $1 million credit limit is only requesting $2,500 then I think we can set aside the law suit idea.
The credit manager sort of agreed and also looked a little awkward. He mumbled something to me about other accounts that may have to be reconsidered.
As a credit manager myself who is always on the look out for any details on a customer that could be red flags, I have a mantra, "Do nothing unwisely to impede a sale". In other words, knowing how difficult it is to get new customers and understanding the challenges in retaining customers, a credit manager should never do anything unwisely or unfairly that would impede the sales process.
Wednesday, February 6, 2013
How do you choose your credit manager
From time to time I am asked to advise companies on the skills
necessary to hire a credit manager. This is not an easy request since
every company is unique by virtue of its products, services, size,
number of employees, and above all the management who are in charge of
running the company. Choosing a credit manager has to not only encompass
the ideas of whether that employee will “fit” the corporate culture but
has to also deal with the understanding of what a credit manager could
and should do for that particular company.
In one basic sense a credit manager should act as the link between helping the company to maximize its sales and at the same time to safe guard its assets. Helping the company to maximize its sales means that if a credit manager has experience in sales, if he has walked in the shoes of the sales person, he will be able to understand the difficulties involved in trying to solicit new accounts and maintain the present accounts. I suppose then that one attribute that a credit manager should have is the ability to understand the activities involved in pursuing and maintaining sales, which will in turn influence credit policy.
Although we probably understand that a credit manager should have skills such as professionalism, a strong work ethic, and a positive attitude etc., these are skills needed for every position. However, what is unique about the credit management position is that it can encompass knowledge and experiences traversing a wide range of areas and departments within a company. In my view, a credit manager who has experience in operations, marketing, accounting, customer service, logistics, IT, administration, or human resources is one who brings to the credit management position a depth of knowledge for the problems and issues that eventually impact the credit management function, goals, policies and procedures.
Personally, when I am asked to review the credentials of a candidate for credit manager, instead of only focusing on whether the candidate has experience to manage all of the company’s credit activities, I am more inclined to look within a candidate’s background for some diversity of professional experience. In this way I feel that the candidate’s view of the credit function will be more balanced, have a greater contribution, and be more supportive of the company’s goals.
In one basic sense a credit manager should act as the link between helping the company to maximize its sales and at the same time to safe guard its assets. Helping the company to maximize its sales means that if a credit manager has experience in sales, if he has walked in the shoes of the sales person, he will be able to understand the difficulties involved in trying to solicit new accounts and maintain the present accounts. I suppose then that one attribute that a credit manager should have is the ability to understand the activities involved in pursuing and maintaining sales, which will in turn influence credit policy.
Although we probably understand that a credit manager should have skills such as professionalism, a strong work ethic, and a positive attitude etc., these are skills needed for every position. However, what is unique about the credit management position is that it can encompass knowledge and experiences traversing a wide range of areas and departments within a company. In my view, a credit manager who has experience in operations, marketing, accounting, customer service, logistics, IT, administration, or human resources is one who brings to the credit management position a depth of knowledge for the problems and issues that eventually impact the credit management function, goals, policies and procedures.
Personally, when I am asked to review the credentials of a candidate for credit manager, instead of only focusing on whether the candidate has experience to manage all of the company’s credit activities, I am more inclined to look within a candidate’s background for some diversity of professional experience. In this way I feel that the candidate’s view of the credit function will be more balanced, have a greater contribution, and be more supportive of the company’s goals.
Monday, February 4, 2013
Like Shakespeare said, “The First Thing We Do, Let’s Kill All the Lawyers”
I hate to be down on a particular group but that’s how I felt like
last week. Here’s the background (locations have been changed to protect
the inept). Had a claim that was placed to my agency about 18 months
ago against a debtor in Pittsburgh for $6,500. The creditor, a
manufacturer located in the Midwest, had sold some equipment to a dealer
they had been doing business with on and off for about 13 years. After
being completely ignored I passed it to a law firm that I used once
before in the past, and they in turn recommended suit, which was
executed .
About 2 months after commencing with our suit, the creditor was countersued for over $200,000. The basis of the countersuit was a falsely claimed assertion that the creditor had not adhered to an exclusive dealer contract which costs this debtor dealer about $200,000 in lost sales opportunities.
After a year of unanswered discovery, delays, and a lot of up and back nonsense, the case finally went to court. Prior to the actual court hearing, there was a mediation where the debtor agreed to drop his counter suit and pay the $6,500 as long as the creditor would be open to selling the debtor equipment parts (either cash in advance or by credit card) in the future. The creditor agreed, the debt was paid that day, and it looks like a real happy ending. This is the quick background but now let me share the fine lines of this story.
About two weeks before the court date, the attorney in charge of our case, and a partner at the firm, informed me that a new person in his office would be handling it. I wasn’t too pleased in hearing that since he, I, and the creditor had been working very nicely over the past year but I went along with it. The new attorney and I exchanged a few emails and I felt a little weird with his tone as we set up a day and time for a teleconference call. Without addressing me by my name in the emails, he just started writing to me like a college buddy, using those little texting shortcuts like, “r u available” and “AFAIK”. Did you know that AFAIK means, “As far as I know”? I sure as heck didn’t. In my reply email I asked him to write in full sentences and skip the abbreviations. I also included 4 questions that I needed answered.
After a week, I contacted this new attorney again and asked him for his contact phone number and if he would also answer the 4 questions that I had previously asked. He replied with his mobile number but nothing else. I called him and asked him why he did not reply to my email. He responded tersely that he sent me his mobile number and I said, “Yes, but you didn’t respond to the 4 questions that I had previously asked you”. He now was looking carefully at the email and said, “I see them.”
“How old are you”?, I asked. “Thirty eight”, he responded. I informed him that I thought he was old enough to know how to read emails carefully and to understand how to communicate as a professional and not a drinking mate. He was silent. We stayed on the phone for 30 seconds without saying anything. He didn’t apologize and he didn’t acknowledge anything wrong. He finally said, “Anything else”? I responded, “yes, do your homework and make sure you have looked very carefully over all the documents for this case and be prepared”. We ended the call knowing that we would be talking the next day with the creditor on a teleconference call.
The next day, I, the creditor, and this new attorney were all on the phone together. The creditor is the general manager of a Japanese company that I have been doing business with for the past few years for collections and credit risk consulting. As the teleconference call got started, the attorney (who is a fast talking New Yorker by birth) framed the conversation in a way that made us feel like we were perpetrators in a crime. As soon as I saw where the conversation was going, I told this new attorney that I will call him back shortly and ended the conference call.
I then called the previous attorney and vociferously complained about this new attorney’s style and said that I do not want him to represent us. To my surprise and disappointment, I was told that they would not change and that we would have to deal with him. “Deal with him? What does that mean”? I was horrified with his answer and told him so. I reminded him that we were the client and that his response and client care were completely unacceptable. He said he would talk with the new attorney and get things in order. If I had had the time, I would have moved the case to another firm but in view of the court date being just a few days away, I accepted this predicament and decided to make the best of it.
After a few more emails and telephone calls with the new attorney, in a short time he came around and seemed responsive to understanding our simple needs and wants to a counterclaim that was bogus from the start and that any one with a little bit of negotiating skill could manage.
On the day of the hearing, our creditor was there to meet the new attorney at the court house. As the creditor informed me later, this new attorney showed up with his shirt half out, shoes untied, the i-phone buried in his ear, and just an overall disaster. But what really blew the creditor away is that the other attorney also showed up not only looking in total disarray but also talked in a way that made a mockery of the whole affair. The creditor was just horrified at how two lawyers could show up being so crummy looking and sounding.
According to the creditor, thank god they had a mandatory mediation before the court hearing. The mediator was a middle aged woman who spoke and acted very professionally and was able to bring the whole matter to its glorious and paid end. My hunch is that if we had had to rely on our two “professional” attorneys to negotiate this claim and counter-claim, I and the creditor probably would be writing this to you from jail.
About 2 months after commencing with our suit, the creditor was countersued for over $200,000. The basis of the countersuit was a falsely claimed assertion that the creditor had not adhered to an exclusive dealer contract which costs this debtor dealer about $200,000 in lost sales opportunities.
After a year of unanswered discovery, delays, and a lot of up and back nonsense, the case finally went to court. Prior to the actual court hearing, there was a mediation where the debtor agreed to drop his counter suit and pay the $6,500 as long as the creditor would be open to selling the debtor equipment parts (either cash in advance or by credit card) in the future. The creditor agreed, the debt was paid that day, and it looks like a real happy ending. This is the quick background but now let me share the fine lines of this story.
About two weeks before the court date, the attorney in charge of our case, and a partner at the firm, informed me that a new person in his office would be handling it. I wasn’t too pleased in hearing that since he, I, and the creditor had been working very nicely over the past year but I went along with it. The new attorney and I exchanged a few emails and I felt a little weird with his tone as we set up a day and time for a teleconference call. Without addressing me by my name in the emails, he just started writing to me like a college buddy, using those little texting shortcuts like, “r u available” and “AFAIK”. Did you know that AFAIK means, “As far as I know”? I sure as heck didn’t. In my reply email I asked him to write in full sentences and skip the abbreviations. I also included 4 questions that I needed answered.
After a week, I contacted this new attorney again and asked him for his contact phone number and if he would also answer the 4 questions that I had previously asked. He replied with his mobile number but nothing else. I called him and asked him why he did not reply to my email. He responded tersely that he sent me his mobile number and I said, “Yes, but you didn’t respond to the 4 questions that I had previously asked you”. He now was looking carefully at the email and said, “I see them.”
“How old are you”?, I asked. “Thirty eight”, he responded. I informed him that I thought he was old enough to know how to read emails carefully and to understand how to communicate as a professional and not a drinking mate. He was silent. We stayed on the phone for 30 seconds without saying anything. He didn’t apologize and he didn’t acknowledge anything wrong. He finally said, “Anything else”? I responded, “yes, do your homework and make sure you have looked very carefully over all the documents for this case and be prepared”. We ended the call knowing that we would be talking the next day with the creditor on a teleconference call.
The next day, I, the creditor, and this new attorney were all on the phone together. The creditor is the general manager of a Japanese company that I have been doing business with for the past few years for collections and credit risk consulting. As the teleconference call got started, the attorney (who is a fast talking New Yorker by birth) framed the conversation in a way that made us feel like we were perpetrators in a crime. As soon as I saw where the conversation was going, I told this new attorney that I will call him back shortly and ended the conference call.
I then called the previous attorney and vociferously complained about this new attorney’s style and said that I do not want him to represent us. To my surprise and disappointment, I was told that they would not change and that we would have to deal with him. “Deal with him? What does that mean”? I was horrified with his answer and told him so. I reminded him that we were the client and that his response and client care were completely unacceptable. He said he would talk with the new attorney and get things in order. If I had had the time, I would have moved the case to another firm but in view of the court date being just a few days away, I accepted this predicament and decided to make the best of it.
After a few more emails and telephone calls with the new attorney, in a short time he came around and seemed responsive to understanding our simple needs and wants to a counterclaim that was bogus from the start and that any one with a little bit of negotiating skill could manage.
On the day of the hearing, our creditor was there to meet the new attorney at the court house. As the creditor informed me later, this new attorney showed up with his shirt half out, shoes untied, the i-phone buried in his ear, and just an overall disaster. But what really blew the creditor away is that the other attorney also showed up not only looking in total disarray but also talked in a way that made a mockery of the whole affair. The creditor was just horrified at how two lawyers could show up being so crummy looking and sounding.
According to the creditor, thank god they had a mandatory mediation before the court hearing. The mediator was a middle aged woman who spoke and acted very professionally and was able to bring the whole matter to its glorious and paid end. My hunch is that if we had had to rely on our two “professional” attorneys to negotiate this claim and counter-claim, I and the creditor probably would be writing this to you from jail.
Tuesday, January 22, 2013
Debt Collections in Japan - A Cake Walk Compared to the US
I'm often asked about the differences between collections in Japan
and the US. Well after performing both consumer and commercial
collections in both countries for several years, I would have to say
that performing collections in Japan is infinitely easier.
I guess the best way to explain the difference is to show you a typical debt collection conversation that I would have with a Japanese debtor (Mr. Kenji Kobayashi). Read below and enjoy.
Kobayashi: Hello, this is Kobayashi.
Steve: Mr. Kobayashi, this is Steven Gan of the International Credit Management Association (slight bow over the phone). As always you are greatly appreciated. Is now a good time to talk with you?
Kobayashi: Oh yes. I received your letter the other day and I am so terribly sorry that I didn't call you. Please forgive me.
Steve: No problem at all. As I had mentioned in our letter, there is an outstanding balance of 480,000 yen owed to ABC Credit Card company and with all due respect I would like to kindly ask you when you might possibly be able to consider making your payment.
Kobayashi: Yes, yes, I completely understand and I would like you to know first that I have every intention of fulfilling my obligation and paying this unconscionably delinquent payment. There's no excuse for it and I feel just horrible.
Steve: I really appreciate your acknowledgement of the situation. Would you kindly help us by making your payment in full very shortly.
Kobayashi: From the bottom of my heart I wish I could say yes to you but I have to tell you that my financial situation is so dire that I can barely make ends meet now.
Steve: I completely understand and appreciate your honestly. What would you be able to afford and at the same time could be reasonable for ABC Credit to accept.
Kobayashi: If possible and with the utmost sincerity I would like to pay this obligation off in 8 payments of 60,000 yen per month starting at the end of this month.
Steve: Oh Mr. Kobayashi, I really appreciate your kind offer but do you think it is possible to pay this obligation off within 4 payments of 120,000 yen per month?
Kobayashi: Mr. Gan, my situation is so tight and I really don't want to make any promises that I would not be able to keep. As it is now, I feel so ashamed about not being able to pay this debt and several other debts.
Steve: Would you possibly consider 6 payments of 80,000 yen per month? Since the debt is already about 1 year old, I don't think that ABC Credit can wait much longer.
Kobayashi: Then I will try to do 6 payments of 80,000 yen per month. Please understand Mr. Gan that I am taking the last bit of food out of my mouth for ABC Credit.
Steve: Your heartfelt cooperation is tremendously appreciated and I shall convey this to ABC Credit.
Kobayashi: Thank you so much for your call Mr. Gan. I look forward to working with you in the matter and please convey my sincerest apologies to ABC Credit.
Steve: Thank you again Mr. Kobayashi for your cooperation.
Kobayashi: Thank you very much.
Steve: Thank you.
Kobayashi: Thank you and good bye.
Steve: Good bye.
Kobayashi: Good bye.
Steve: (Wait until Mr. Kobayashi hangs up his phone and then I hang up my phone)
The upshot of that conversation is that about 70% of all Japanese debtors will enter into a payment agreement in the first conversation and about 90% of them will break the first payment promise. By about the 3rd call you can finally receive payment and almost all payment schedules from that point forth will be upheld.
So in essence, I suppose the biggest difference in collecting between Japan and the US is that coupled with shame, the Japanese have an overwhelming desire, at least on the phone, to fulfill an obligation. Not like here in the US where I'm sometimes told not so politely to "take a hike".
See Also: BRAZIL’S DEBT COLLECTION INDUSTRY – IT’S NO CARNIVAL
I guess the best way to explain the difference is to show you a typical debt collection conversation that I would have with a Japanese debtor (Mr. Kenji Kobayashi). Read below and enjoy.
Kobayashi: Hello, this is Kobayashi.
Steve: Mr. Kobayashi, this is Steven Gan of the International Credit Management Association (slight bow over the phone). As always you are greatly appreciated. Is now a good time to talk with you?
Kobayashi: Oh yes. I received your letter the other day and I am so terribly sorry that I didn't call you. Please forgive me.
Steve: No problem at all. As I had mentioned in our letter, there is an outstanding balance of 480,000 yen owed to ABC Credit Card company and with all due respect I would like to kindly ask you when you might possibly be able to consider making your payment.
Kobayashi: Yes, yes, I completely understand and I would like you to know first that I have every intention of fulfilling my obligation and paying this unconscionably delinquent payment. There's no excuse for it and I feel just horrible.
Steve: I really appreciate your acknowledgement of the situation. Would you kindly help us by making your payment in full very shortly.
Kobayashi: From the bottom of my heart I wish I could say yes to you but I have to tell you that my financial situation is so dire that I can barely make ends meet now.
Steve: I completely understand and appreciate your honestly. What would you be able to afford and at the same time could be reasonable for ABC Credit to accept.
Kobayashi: If possible and with the utmost sincerity I would like to pay this obligation off in 8 payments of 60,000 yen per month starting at the end of this month.
Steve: Oh Mr. Kobayashi, I really appreciate your kind offer but do you think it is possible to pay this obligation off within 4 payments of 120,000 yen per month?
Kobayashi: Mr. Gan, my situation is so tight and I really don't want to make any promises that I would not be able to keep. As it is now, I feel so ashamed about not being able to pay this debt and several other debts.
Steve: Would you possibly consider 6 payments of 80,000 yen per month? Since the debt is already about 1 year old, I don't think that ABC Credit can wait much longer.
Kobayashi: Then I will try to do 6 payments of 80,000 yen per month. Please understand Mr. Gan that I am taking the last bit of food out of my mouth for ABC Credit.
Steve: Your heartfelt cooperation is tremendously appreciated and I shall convey this to ABC Credit.
Kobayashi: Thank you so much for your call Mr. Gan. I look forward to working with you in the matter and please convey my sincerest apologies to ABC Credit.
Steve: Thank you again Mr. Kobayashi for your cooperation.
Kobayashi: Thank you very much.
Steve: Thank you.
Kobayashi: Thank you and good bye.
Steve: Good bye.
Kobayashi: Good bye.
Steve: (Wait until Mr. Kobayashi hangs up his phone and then I hang up my phone)
The upshot of that conversation is that about 70% of all Japanese debtors will enter into a payment agreement in the first conversation and about 90% of them will break the first payment promise. By about the 3rd call you can finally receive payment and almost all payment schedules from that point forth will be upheld.
So in essence, I suppose the biggest difference in collecting between Japan and the US is that coupled with shame, the Japanese have an overwhelming desire, at least on the phone, to fulfill an obligation. Not like here in the US where I'm sometimes told not so politely to "take a hike".
See Also: BRAZIL’S DEBT COLLECTION INDUSTRY – IT’S NO CARNIVAL
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