From XU Magazine, 
Issue 33

Why debt collections and receivables management is one of the hardest jobs in the world

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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When most people think about the hardest jobs in the world, they don’t usually consider debt collectors and credit controllers. These roles are often overlooked but can be some of the most difficult ones.

One of the reasons for this is that debt collectors and credit controllers often have to deal with a lot of negativity on a daily basis. They are in many cases liaising with customers who are frustrated because they haven’t been able to pay their bills, unhappy with the product or service that was delivered or who disagrees with the invoice completely. This can be tough on the psyche and mental well-being of the collector, and it’s no wonder that many people in these roles often find it hard to cope with their job.

In this article, we’ll be looking at some of the reasons why debt collections and receivables management is one of the hardest jobs and what those in these roles can do to make it easier.

Debtors are usually going through a rough time

Just because people or businesses are in debt doesn’t mean they’re maliciously withholding money from you. In most cases, debtors are going through a tough time themselves and are often struggling to make ends meet. Often, this stress and frustration is taken out on the debt collector or credit controller, who’s merely doing their job, and it can be difficult to remain professional and calm when this happens. 

The job of the debt collector is to try and get as much money from the debtor as possible - regardless of their circumstances. This can often be a difficult thing to do, especially if you sympathise with the person’s and business’s situation. Feeling like you’ve ruined someone’s day, or added to their stress, is never fun. And yet, credit controllers and debt collectors have to deal with this regularly. It’s hard to constantly chase people for money, especially when you know that they’re struggling, but collectors have to remember that they’re just doing their job.

Facing rejection

Another difficult thing about debt collections is that one experiences rejection daily. People and businesses often ignore payment reminder emails and phone calls, and if they do pick up, they can be quite forceful in their refusal. This can be frustrating, and it’s easy to start feeling like you’re not making any progress.

No one likes to be rejected, but debt collectors have to deal with it regularly. If a debtor is not willing to cooperate or make payments, there is very little that a collector can do. It can be frustrating and disheartening to constantly be told no, but collectors have to keep trying.

It’s a high-pressure job

As a credit controller, securing the funds that are owed to your company is essential. This means that there is a lot of pressure to perform well. In many cases, the future of a company rests on its ability to collect payments from its debtors, if they don’t, it could mean financial ruin for the company.

It’s also a high-pressure job due to the nature of the work. You’re constantly chasing people for money, and often dealing with difficult situations. This can be stressful and can take its toll on your mental health.

You have to be both customer-driven and numbers-driven

Insisting someone pay you the money your company is owed while still maintaining a positive working relationship is a fine line to tread. You need to be firm but fair, and always keep the company’s best interests in mind. This can be a difficult balance to strike, and it’s one of the things that makes debt collection and receivables management such a challenging job.

What can you do, as a credit controller, to make your job easier?

As a credit controller, there are a few things you and your businesses can do to make your job easier.

Have a good understanding of your credit control policy

Make sure you have a good understanding of your company’s credit control policy. This will help you to know exactly what was agreed between your customer and your sales team in regards to payment terms and late payment fees, and also help you and your team decide on how far you can push when it comes to your collections activity.

An effective internal and external communication of the credit policy will help to avoid misunderstandings later on as well as provide a good foundation for future negotiations.

Monitor your customer’s credit risk

Keep an eye on your customer’s credit risk. This will help you know when to take action and how much pressure to put on them. If you know your customers’ situation, you will be in a better position to negotiate, and you can offer them alternatives to help them pay their debt before it gets out of control and the collections tasks become more difficult and stressful, both for you and your customer. 

Be persistent but not pushy

Customers who are behind on their payments will often try to avoid contact with the credit control or debt collection team. It is important to be persistent but not pushy. Pushing too hard will only make the situation worse and may result in the customer is less likely to pay.

Develop strong relationships with your customers

Getting to know your customers can be helpful in several ways. First, it gives you a better understanding of their business and their payment behaviour and processes. This can help you to make more informed decisions about when it’s best to reach out about outstanding payments, and also make the collections process itself more efficient and effective. Additionally, it can help to build goodwill and mutual respect between your company and customers. 

Stay on top of your invoicing

Effective, error-free invoicing is essential to the receivables management process. Your invoices must be accurate, complete, and timely to avoid delays in payments. Additionally, you should make sure that your invoicing system is integrated with your accounts receivable system so that you can track payments and easily follow up on late or missing payments without having to look and work through several spreadsheets and software. 

Having this in place will ensure that customers are being billed correctly, and it will also help you make sure that you and your team are following up with all overdue invoices and that no invoices are falling through the cracks. 

A vital part of any business

Debt collection and receivables management is one of the hardest jobs, but also one of the most rewarding. Without effective accounts receivable management, businesses would struggle to stay afloat, making it one of the most vital jobs in the business world.

Why leave it there?

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