DOCUMENTING DISPUTES: ARM YOUR AGENCY


Despite the various types of disputes that can be raised, most fall into two distinct categories. First is where the debtor legitimately believes that he does not owe the balance and may have failed to communicate with the creditor in an effective manner. Second is where the debtor merely raises the issue of a dispute as a “smoke screen” to a third party collection agency in order to buy additional time before having to make a decision on payment. Unfortunately, unless we have been advised that a dispute may exist or that the debtor might raise an issue, we have no way of knowing when we make our first contact which type of dispute the case involves.

Upon reporting back to the client that there is a dispute and providing the necessary information, we are occasionally accused of “taking sides with the debtor.” In reality, we are seeking additional information that will allow us to resolve the dispute, in the least time possible, without proceeding through the legal system. The information is then presented to the debtor with a request for payment.

Most sales training contains a section referred to as “Overcoming Objections.” Generally speaking, when a collector encounters a dispute, he must employ the same skill; overcome the debtor’s objections and demonstrate why they are obligated for payment.

It is quite possible that the client has undergone this process in its previous collection activity. However, since the debtor has raised the issue to a third party (i.e., collection agents), the collector must “overcome the objection” or the debtor will continue to refuse payment. The agency presentation may have a greater influence upon the decision process that the debtor must undergo (or at least expedite the process). The basic reason for this is the impact of “affirmative action” taken by the client to demonstrate the validity of the obligation. This is far less expensive and less burdensome than proceeding through the legal system.

Although there are only two basic categories of disputes, the reasons for those disputes vary widely within those categories. The documentation needed could be as simple as a proof of delivery or as elaborate as explaining your pricing system, why credit cannot be issued, the time it took to ship the goods to the debtor, or maybe even opening up the lines of communication between your credit and sales departments. Sometimes the sales department will grant the debtor special conditions and inadvertently fail to advise the credit department.

In any event, just because a collection agency calls a debtor, it does not automatically wipe away all these prior objections and immediately induce payment. A good, solid, and well documented foundation is the best position to start from and the most effective means to “arm your agency.”