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COLLECTIONS: You Can Collect From a Turnip

What do you say when the debtor says, “You can’t get blood from a turnip?”  This is the phrase that sometimes stumps both inexperienced and experienced collectors.  We all know you didn’t lend the money to a turnip, but the debtor must believe he has been transformed into a vegetable.  You, in turn, you must now figure out how to collect from one.

Basically, there are two types of turnips:

Turnip A: The “will pay” vegetable.  This turnip will pay, but feels he cannot pay at this time, and

Turnip B: The “won’t pay” vegetable.  The won’t payturnip never intended to pay you.  This debtor most likely is a vegetable.  The accuracy of his or her self-reporting is often called into question and he/she may be irrational in his conversations.

To collect from Turnip A you’ll need to overcome his objection and convince him why they should pay you before anyone else.

The professional collector wears many hats when speaking with the member; communicator, salesperson, counselor, and financial advisor.  All calls require the collector to listen intently to everything the debtor is saying and trying to identify the reason for the late payments or the objection to making the payment.

Everyone pays someone and the collector must remember they are competing for the same pool of money that all the other creditors are competing for.  People are persuaded by people.  To overcome his objections, you’ll need to convenience him that the very reason he believes he can’t pay is the very reason he should pay.

Try putting a question mark after the payment objection. 

If the debtor says, he “Won’t pay.”

Some responses might be…

“Why don’t you believe you are past due?

“What part of the account do you feel you don’t owe?”

“What is the problem?

“Let’s clear up the undisputed portion of this bill”

If you can show the member that whatever the objection is actually the reason they should pay, you will effectively eliminate the “blood from a turnip” objection.

For example, if the debtor is unemployed, he wouldbenefit by keeping his payments current with your credit union.At some point during or after his unemployment period he may need to borrow money to help him catch up.  If he keeps this loan payment current with your organization, you may be in a position to help him in the future.

However, if you feel the member has some undisclosed reason for not paying, be honest and just ask him what it is.Determining the real reason(s) for non-payment aren’t always easy and the collector may need to ask WHY up to five times in order to get to the heart of the problem.

Collector:  “Why can’t you make the payment?”

Debtor:  “I don’t have the money.”

Collector:  “Why don’t you have the money?”

Debtor: “Because I have to bills to pay, you’re not my only bill.”

Collector:  “Why were those bills more important that this?”

Debtor:  “Because I had to get the car fixed so I could go to work.”

Ahhhh, now we’re getting somewhere. This is the real problem. The car is in need of repairs.  Is this your collateral?  Did we find out where the vehicle was being fixed?  What was wrong with the car?  Now we’ve established that this loan is important to him.  The member has told you he needs his transportation to get to work.  This may be a good time to pursue, the very reason he thinks he can’t pay is the very reason he should pay approach. Focus on why it’s important to keep his car payments current.

If the member states he, “… has no money”; the collector might say, “If you had the money, you would take care of this – right? In most cases the answer will be yes.  The collector just has to find the best payment solution.

But if the member says, “Get in line.  You’re not the only creditor I owe money to.”  The collector might respond with, “Let me help you find a solution that helps you get this debt and any others resolved at the same time.”  Delinquency resolution isn’t always about what you say, but in how you say it.

In other situations, the debtor might actually believe he’s already paid the payment.  In these cases, the collector should indicate, “In order to credit your account properly, I need to ask you when and where you sent the check and the amount it was for.”

  • If the check was sent more than ten days ago, the collector should ask for a new check and if available, take the payment over the phone.
  • If the replacement check has not been received in a reasonable time frame, then escalate collection efforts.

Ask the member to “Check with theirfinancial institution to see if their check has cleared the account.”

  • If the check has cleared their account, ask for a fax of the front and back of the check.
  • If the check has not cleared their account, ask for a new check; again, if available, take the payment over the phone.

During a collection call, it’s easy to get caught up in the moment and feel the need to be right, have the last word and win the argument.  It is important that collectors keep their eye on their goal; resolving the delinquency.  This will not happen if the collector’s objective is to win the verbal battle.

  • Find some point of agreement before you start to answer an objection. This is the best known way to cushion your answer and render it unobjectionable.  The member will not object as much if he feels you understand his problem.Often difficult calls happen because consumers do not think anyone has heard them and feel a need to shout.  To help defuse the situation, the collector might say something like…”This is what I heard you say…. Can we agree on that?” Let me summarize what I believe you said…” Did I get it right? or “I think I heard you say.. If we agree to this, will you agree to…”
  • Empathize. Say something like, “I understand why you feel that way-others have felt the same way.  In fact, I have felt the same way myself.  But here is what I have found to be the case…”, then the collectors should state the facts, leaving strong emotions out of the conversation.
  • An apology goes a long way, even when you didn’t do anything wrong. When consumers get upset during a collection call, keep in mind they are upset at the situation, usually not at the collector.  Apologizing helps soothe feelings of frustration and anger.  The collector should try phrases such as: “I am sorry I have upset you.  Can we start over?” Or “I am sorry you feel this way.”  “I apologize that is not what the credit union intended, How about we look at it this way….”

Denying the objection

  • Sometimes, members will test the credit union with some pretty outlandish objections. If you try to logically answer illogical objections, you will be sucked into a long, drawn-out and usually fruitless ordeal.  Show the member you have your cardson the table and expect him to do the same.
  • If the objection is obviously untrue, you can smile and say, “Of course I don’t believe that.”

Close the sale

Any reply that can postpone your demand for full and immediate payment can be met in several ways. It is amazing how many collectors miss the close because they didn’t ask for the money.  Don’t forget, the collector’s goal is to prevent members from appearing on the delinquency report.

To resolve the delinquency the collectorMUST overcome the debtor’s objections by discovering solutions which allow the member to make the payment.  Here are some response scenarios that may improve the collectability of your credit union’s past due accounts:

  1. The member may not be able to make two payments to meet your minimum payment expectation. A solution may be to accept one and ¼ payments over the next four-months.”  You’ve now discovered a win-win solution for both the member and the credit union.
  2. If the debtor indicates that all he can do is make payment, the collector might say, “Well, we can work with that today, but you need to get this paid current as quickly as possible. What did you have in mind to bring this account up to date?”

Keep in mind that you can’t let the debtor drag this out.  The collector must keep their eye on the goal and not let this account hit the delinquency.  The collector must direct the conversation to achieve their objective and collect the debt.

Once you discover a solution to the objection, the collector should simply say, “Let’s go ahead and get this paid”.

….And should immediately take a payment over the phone!

Lending Solutions Consulting Inc. is the premier consulting group in the country.  Karin Brown-Purtell, the most experienced and educated consultant in the industry, specializes in teaching credit union collectors resolution strategies.  If your credit union is making no head way with your delinquency numbers, ask yourself if your collectors work in a “dial for dollars” atmosphere.  We promise you this method, although very common, is unproductive and will yield marginal at best results.  The article above provides a small snapshot of the training Karin provides on-site for collectors.  She is also phenomenal at helping credit unions with maximizing collection productivity by analyzing collection ques and workflows.  Please contact Scot Vackar at svackar@rexcuadvice.com or 224-286-6070 to stop running in one place and gain some distance. 

This content is for CU BUSINESS eMagazine , THE TEAM BUILDER (GROUP SUBSCRIPTION), and Special Deal: 2 websites members only.
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