Don’t make the mistake of thinking that profit is the objective. That make it sound like it’s ‘nice to have’. It is a necessity, not ‘nice if you can do it’ –  profit is an expense of business. No less an expert than famed writer and management consultant Peter Drucker said, “The purpose of a business is to create a customer. “

Nobody has a greater opportunity and responsibility to create and maintain customers than a professional collection team.

Too soft an approach?

Suppose you didn’t follow up with your delinquent customers at all? Sure there are some customers who will pay you but many others don’t pay if they are not reminded. Next time, when they want to place another order, will take their business elsewhere. They’ll take their cash business elsewhere too rather than face some embarrassment.

Too tough?

You might get more of your money but your sales and marketing people will get an earful in the future. A lot of other people will get their ears filled too, people will hear about your non-negotiating, won’t listen, aggressive approach. There are a lot of folks out there who carry a grudge a long, long time. Even if you are the only game in town with a monopoly of some sort, people will want to get you if they can. This is one of those areas of communication where ‘how’ you say it may be more important that the ‘what’.

It’s a balancing act!

Sometimes I’ve called it the Goldilocks’ approach: not too hard and not too soft. Even if you give it another name perhaps you will agree that we have perhaps the most difficult balancing act in business which is to collect the money AND (for the most part) keep the customers.

(For the most part)

We are not naïve in the business of credit and collections. I don’t think any of us start out that way but if we did, it would not last long. First of all, there are some ‘credit criminals’ out there, people who had no intention of paying you right from the start. These are not customers they are crooks. Identify them quickly and get them off the books. Make yourself a hard target and make their life difficult – a legal nightmare if possible. It is not a matter of spending $5 to get $1 because it is rare there is even $1 to get back. However, you want them to think long and hard before they try to reappear at your firm.

There will be other customers who are not ‘crooks’ but their paying habits are expensive to you in any one of a number of ways, including having to follow them up every month. If they are going thru a tough patch, work with them if you can. Not only will they be loyal to you, but you’ll feel good about yourself and your organization too. You may want to try every trick in the book to have them become your ‘dream’ customer but habits, even the expensive ones, are difficult to change.

It may be best to sever a relationship and let them begin anew with someone else. Careful though, there isn’t anything like someone who feels they’ve been dumped to….well, take it personally. Just ask anyone who has gotten out of a marriage or a long term relationship. (It’s not you Mr. Customer, it’s us.)

The same holds true if you decline credit to an applicant. I seem to recall Credit & Collection Specialist Abe Walking Bear saying “never tell anyone you won’t give them credit”. Better to say you will if….and let them know what they have to do. Could be a guarantor as an example.

Nobody did it better!

Seems to me the real business of creating and maintaining a customer – the true objective of Collections – was demonstrated best by the late Dennis Gaulin.

Dennis was a credit manager and the author of “Data to Decisions: The Credit Manager’s Internet Handbook”. He passed away, much too early a few years ago and is sorely missed in this business of ours. Some of his spirit remains with us and a portion is demonstrated by the following story.

Before most of us were aware of the value of the Internet, Dennis had set up email alerts (he referred to them as electronic snares) to monitor some of his major customers. One of them was a silent and private North American subsidiary of a public company based in Europe. There was a press release, in Dutch that indicated some trouble for the silent partner. It hadn’t been picked up by the North American business media.

Dennis took a number of immediate steps. He quickly obtained credit insurance on a group of accounts, the troubled one ‘amongst’ them. In the weeks that followed, they reduced the credit line from $9 million to $3 million and they also stopped producing some specialty products in China.

Sure enough, just 12 weeks after receiving the email advice, the customer went bankrupt. Dennis estimated the actions saved his firm just over ten million dollars. Keep in mind; they continued to sell to their customer, at a reduced risk, over the 12 weeks.

I had Dennis in mind when I developed the motto of the International Centre for Professional Collections.

Carpe Nummos – Retine Emptorem

If your Latin is as rusty as mine, that translates to: Seize the money – keep the customers.

How many customers have you saved today?


The best in the world at “saving customers” will gather at the Fourth World Credit Congress in Johannesburg on May 14 – 16, 2013. Tim Paulsen will be a featured speaker.

Click here for details.