In the Wild West days of collections, collectors went out to the customer’s location to “persuade” them to make good on their payment obligations. Unfortunately, the term “persuade” didn’t always have the best of meanings and other terms, such as “intimidate and threaten,” come to mind.

Fortunately however, as the collection profession evolved and intertwined with credit risk management, onsite visits have taken on a much different, professional and important function. In fact, one of the best things a credit manager can do is to accompany their sales professional on a client visit prior to negotiating the details of any sizable deal where the credit amount being requested is material. Since seeing and talking with the potential client face to face can yield many telling details that figures often cannot, let’s take a look at how onsite visits can greatly facilitate the credit and collection function.

The physical condition of the company – A walk through a client’s manufacturing area, warehouse or other facility can give you a great birds eye view of their general condition. If you see a well-organized and clean operation, you would certainly get a good feeling. Conversely, a leaky roof, garbage in the corners, and other forms of disrepair and disarray could be warning signs as to the customer’s financial condition.

The number of employees and the work environment – Have you ever visited a company and it feels like you’re walking into a ghost town? With hardly anyone in sight, you might ask yourself how the company operates with no one around. When you see the lights on most everywhere, hear the phones ringing, and notice the employees in meetings, working at their computers, or talking together, it indicates a lot of buzz in the organization. This doesn’t mean that every client has to have hundreds of employees doing cartwheels, but even with a very small operation, hopefully there’s an appropriate level of activity.

The demeanor of the ownership or management with whom you’re speaking – Talking directly with your contacts at the company can provide either a feeling of comfort or concern. When your potential client conveys an enthusiastic tone, this often reflects an excitement in where they work, what they do, and what they sell. However, if there is a ho-hum, lackluster, or disinterested feeling about their company, that probably won’t provide much assurance for a future business relationship.

In addition, talking with those in charge can help you clear up misunderstandings or issues regarding their financial, credit, or other related data. For example, sometimes published credit information is not brought up to date and a major lawsuit may have already been resolved in favor of the potential client. Other times, there’s published financial information that seems exaggerated, especially in comparison to what you see on the premises and hear between the lines.

Moreover, meeting with each other is much more effective in creating a deeper relationship rather than only being a voice on the phone or a signature on an email. In other words, it’s not only the sales professional who needs to have that personalized connection, it’s imperative for the credit and collection professional to have it as well.

When the account goes south

No matter how thorough the due diligence and subsequent monitoring of an account may be, for whatever reasons, a client may completely stop honoring their payment obligations. When this happens, the sincerity shown at the beginning can quickly dissipate, leading the client to stop answering phone calls and/or responding to voice messages, emails, and letters.

When the money outstanding is particularly significant and all other means to contact the debtor have failed, an onsite visit may be your last option to ascertain the status. Having already met the people in charge and hoping they may still be there, making that onsite visit may give you that opportunity to talk with one or more individuals to find out what the situation is.

Upon arriving at the debtor’s location, you may find that the business is still operating but there is a hunkered down mentality to avoid dealing with creditor phone calls. Nevertheless, perhaps you’ll have the chance to hear about all that is preventing them from making payment to you. You might be surprised that having forged a positive relationship early on is now providing you with some good faith capital to negotiate a payment arrangement. Or, if the goods or equipment still haven’t been sold and are identifiable, it’s possible to work out their return. In any case, showing up will either keep the collection ball rolling or let you know that the game is all over.

If you do make an onsite collection visit, a few points to remember include:

  • Make your visit during regular working hours
  • Don’t go with more than two people from your company
  • Always keep your tone calm and language polite

One final point is that when an onsite visit is not cost effective, you should be able to rely on your third party collection partner who can perform onsite visits on your behalf through their domestic and international network. With the same guidelines above in mind, their onsite visit assistance will greatly increase the collection potential of a claim, especially when the lines of communication have gone silent.

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This article has been edited by Steven Gan. 

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