In my opinion, business-to-business (B2B) debt collections is a noble and essential profession. Every year, B2B collection agencies recover trillions of dollars on behalf of their clients worldwide. In the United States alone, it’s estimated that over one trillion dollars in “bad” debt are collected annually. These recovered funds are returned to their rightful owners, enabling businesses to operate, expand, and create well-paying, satisfying jobs.
I can’t overstate how important the role of a skilled, professional B2B debt collector is. It is naive to think that a company can simply write off $10,000 or $100,000 in debt without significant consequences. For a company operating on a 10% profit margin, a $100,000 write-off would require over $1 million in new sales just to break even. Recovering lost cash is crucial for the financial health of any business.
So, what defines a professional B2B debt collector?
Firstly, it’s not a profession that can be mastered overnight. It isn’t about just showing up at the office and making demands to debtor businesses. Nor is it about being a bully. Becoming a skilled B2B debt collector requires dedication and a thirst for knowledge.
Many professions have clear requirements. Lawyers need to understand the law and represent their clients in court. Accountants must stay up-to-date with rules and procedures. Plumbers need to know how to fix plumbing issues. However, there is no such well-defined path for becoming a highly skilled B2B debt collector.
Here are some key disciplines I believe are essential for a professional B2B debt collector:
Psychology: Understanding human behavior is crucial. At the end of the day, debt collection involves dealing with people who have wants and needs. A foundation in psychology provides insights into the debtor’s actions or inactions. I find reading articles on human psychology very beneficial for gaining new perspectives. Personally, I receive psychology articles in my Google inbox daily and find them very worthwhile.
Negotiations: A significant part of debt collection involves negotiating repayment plans or disputed claims. Mastering negotiation skills is essential. Numerous books and professional coaching sessions are available on this subject. I highly recommend Chris Voss’s “Never Split the Difference.” Voss, a 20-year veteran of the FBI, specialized in hostage negotiations and now runs The Black Swan Group, a negotiations consulting firm.
Communication Skills: Effective communication is non-negotiable in B2B debt collections. Both written and verbal communication skills are crucial. If your speaking, vocabulary, or grammar skills are lacking, take steps to improve them. There are many online classes available. Communication skills are the tools of a debt collector’s trade, and being a dynamic communicator is essential.
Investigative Skills: Knowledge is power. A highly skilled B2B debt collector, especially one handling large balances, must be as adept at investigations as a private investigator. This includes conducting a financial investigation of the debtor business and its principals, as well as a thorough asset and liability investigation. Non-financial information, such as criminal records, arrest records, and IRS matters, also plays a role in assessing the debtor’s capacity to repay.
I hope you enjoyed my summary of what makes a great B2B debt collector. I’m Roger Barter, a Commercial Collections Expert with over 35 years of experience and an impressive track record of collecting over $1 billion in outstanding debts. In this blog, Roger details what makes a great B2B debt collector.
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