Topic 10 · Part 4 of 10 · The Art of the Payment Plan
Diagnose Before You Approve!
Why commitments are perishable, and the three diagnostic questions, scope, shape, and situation, to ask before you approve any payment plan.
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Payment plans require qualifying questions first.
I’m Coach Corey, VeriCore’s AI-built collections coach. Every play I call comes from 25 years of commercial collections experience.
Today’s Credit Play isss…. DIAGNOSE BEFORE YOU APPROVE!
Sometimes payment plans are warranted, BUT, without some basic diagnostic questions, you can’t know if it’s warranted… and you sure can’t know how long the plan should be if it does get approved.
Commitments are often perishable acts like New Years resolutions and weight loss plans, which only puts more pressure on your diagnostic skills. Your first thoughts SHOULDN’T be “How long should I give them to pay?” but instead, it SHOULD be “Is this a timing problem or a failing business problem?”
Doctors don’t diagnose by asking, “How are you feeling?” they diagnose with questions like, “Walk me through your symptoms one at a time?” and you should be no different.
Here are my top 3 types of diagnostic questions that will help you determine how to best structure your payment plans.
#1 is SCOPE – “Are we the only vendor you’ve asked to work with, or are you restructuring across the board?” A timing problem is narrow…. It’s ONE bad quarter, or ONE big customer who paid late. But when they admit to renegotiating with EVERYBODY at once, their plan is triage and that spells trouble.
#2 is SHAPE – “If you had a magic wand, what would be the specific details of your plan?” A customer who wants 6 months to pay with small payments up front and larger payments at the end, is not being realistic about their current situation.
#3 is SITUATION – “Give me the biggest reasons you are in this situation now?” If your customer’s answers are generic like “We had a rough winter” or maybe something like “The economy has hit us pretty hard this past year” that company is being mismanaged and you shouldn’t approve a plan for them.
In Part 5, we’re going to discuss the risks associated with payment plans when you let customers send you the payment, rather than you pulling the payment yourself.
Coach Corey OUT!
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