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Till Payoff Do Us Part Part Two The Best Time to Do Collections

My parents-in-law just celebrated their 40th wedding anniversary. Occasionally in the paper, I’ll see a picture of a smiling couple in honor of their 50th or 60th anniversary! Once, I even saw a story about a couple in a local nursing home that was celebrating their 75th! WOW! So, what is the secret to these long-term relationships? I’m sure they probably each have their own unique formula, but I’d bet that one factor most of them share is that they developed a solid foundation prior to walking down the aisle.

There are a lot of steps that we can take beforehand to increase the likelihood of a successful marriage – having the proper commitment to the marriage or attending pre-marital counseling (which reminds me of the bride who tells her new husband, “I just want you to know I do not believe in divorce. I do, however, believe in murder…”). Do all these advance preparations guarantee a marriage will last? No. There will always be exceptions to the rule, but in order to increase the odds of success, we owe it to ourselves to do everything we can to do things right from the beginning.

Now, before you start wondering why there is a new marital-advice article in Auto Dealer Monthly, let me bring this around to the point of the article. Like in a successful marriage, establishing a foundation is one of the most important keys to successful collections! In fact, the most effective Buy Here Pay Here (BHPH) dealers actually begin the collection process before the retail installment contract sale is ever past due.

Most BHPH dealers understand that the way a deal is structured from the beginning can set a deal up for failure or success. This is true even in little details, like making sure payment dates coincide with the customers pay cycles. Our customers sometimes struggle with sticking to (or even developing) a budget, which partially explains why they can pay us $80 per week like clockwork, but they couldn’t handle the $250 monthly payment they had on their last vehicle that was repossessed by the bank.

A great tool to utilize at the time of delivery that will help your customers get started on the right track and stay there is automatic debit or credit card payments. Programs such as ICVerify** can help you coordinate the setup, so with a push of a button, you can transfer all those payments directly into your bank account. Best of all, you collected all payments without a single collection call or letter! Currently have over 25 percent of our payments are set up this way, and if your customers have access to a debit or credit card, automatic payments simplify things for your customers…and you too, of course!

Another simple technique that can help start our customers off on the right foot is to begin all new accounts with a Welcome Call and Letter of Introduction. This will go a long way toward building the rapport necessary to have a proper relationship between collector and customer. Yes, effective collectors definitely need to have rapport with the customer. After all, collections are really just sales done repeatedly and we expect our sales staff to establish rapport during the sales process. Any time a collector calls the customer, he is selling them again on why it is important they make their payment to you immediately.

Remember, in BHPH it is almost guaranteed that our customers will encounter a snag at some point during the term of the loan. Our goal should be that they contact us when a problem develops rather than us having to contact them.

Each time a new account is added to the books, the collector, should send a friendly introduction letter telling customer you are looking forward to working with them, and most importantly, to call you ASAP if they are ever having difficulty in making a payment. We want to convey the message that we will always try to help, but in order to help, we must know the minute there is a problem.

The welcome call continues initial relationship-building the next day. With a call from the collector to the customer, which again should be done in a very friendly and welcoming manner, establishing necessary rapport can begin. Continue to emphasize that if there is a problem, we want them to “reach out and contact us”, not “run and hide from us.” Best of all, because the first phone and letter contact are not attempts to dun them for money, you have hopefully gained an advantage over other creditors if you do need to contact them about late payments in the future.

So, remember that the most effective time for collections in BHPH is before the account is ever past due. Next month, we’ll take this concept one step further, and look at ways you can improve your collection efforts before the contract is ever signed. In the meantime, remember that like in a good marriage, establishing that proper foundation at the beginning will help set your customers up to succeed and help you to make it to ‘till payoff do us part.’

** ICVERIFY, Inc. is a leading provider of payment software for merchants of all types and can be found at
Vol 3, Issue 8

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