Receivable/Accounts - Information for Credit and Collection Issues

Sunday, December 2, 2012

How Much Is Too Much?




One of the most common subjects that abounds on the internet is the subject of collection agency harassment.  However, in many provinces, the frequency of allowed telephone calls is not defined.  So, how much is too much?

Nova Scotia has recently proposed the Debt Collection and Management Reform (2012) Act.  This proposed law for the province states, amongst other things, that a collector may only contact a debtor three times in seven days.  The revised wording to the Act can be found here:


Ontario already has similar wording in force under the Collection Agencies Act – it states that a collector may only make three contacts with a debtor in seven days. This is obviously an attempt to have a unified set of practices across the provinces.  The Ontario Collection Agencies Act can be found here:



Collection Agency Harassment

Imagine this if you will – a collection agent calls someone who owes money for the first time, and the consumer yells “stop harassing me!” and hangs up.  It`s only the first time we`ve called ... and this happens all the time.

A collection agency can (and should!) reach out to consumers and attempt to negotiate payment arrangements before affecting someone’s credit rating, or start legal proceedings.  And let’s face it, people aren’t exactly excited to hear from a bill collector and find out they owe money.  Sometimes – in fact, most times, multiple attempts are needed to reach someone.  But how much is too much?


An Initial Attempt To Reach Someone

The collection agency wants to create a sense of urgency and receive a return call for messages, so after the initial letter, and the first call goes unreturned, what’s the best interval to call back? 

The tightest legal frequency for contact in Ontario is a call every other business day.  A call every two, three, or four business days is perfectly reasonable.  Obviously, a message on answering machine or with a person in the household left is better than a call that is not answered, but really, is a contact with a debtor needed every other day?


Making Arrangements

If a debtor is reached and arrangements are made, certainly contact should be maintained to make sure whatever promises are kept – within reason.  If a consumer is contacted on the fifth day of the month, and they promise to make a payment into the agency trust account on the twentieth day of the month, certainly calls every two days aren’t necessary.  However, a reminder call on the 19th is not unreasonable.

Ideally, however, arrangements can be made in the first call through post-dated payments or EFTs, and follow up calls aren’t required if the arrangements are met.


Positive Contact

I think a lot of collection agents forget the power of positive contact.  Not all calls need to be made on a broken promise or an NSF payment.  If a debtor has post dated cheques for each month, a follow up call a day or two later to tell the consumer that their payment has been processed, how much has been paid to date, and what the balance stands at can maintain goodwill and keep open channels of communication.


Refusals To Pay

So if a debtor is reached, and they refuse to pay, should they be called back in two days?  Probably not.  There are lots of reasons for non-payment, and a slim fraction will change in a handful of days.  If a consumer is upset about being contacted by an agency, is suffering financial or emotional distress, or a confrontational situation has sprung up, a cool-down period should be set, and the file should be reviewed in a reasonable period of time.

If a debtor is emphatic about not paying, and sends a registered letter to the agency, no more calls can be made.  Likewise, if a debtor calmly and emphatically demands of the agent that no further calls should be made, this sentiment should be honoured.  Why?  Because if one party refuses to engage in negotiation, trying to force communication isn’t going to do anything other than cause grief and complaints to the creditor and the agency itself.


The Evil Predictive Dialer

Predictive dialers are powerful tools for generating contacts – and powerful tools for generating complaints and presenting an unprofessional image to consumers.  Remember that predictive dialers are often built by and for telemarketing campaigns rather than collection agency strategies. 

I have heard frequent horror stories of agencies calling a debtor multiple times in a day -- I would suggest to agency managers that just because you can make multiple calls to a single debtor every day, doesn’t mean you should.  Think of your attempts as a diminishing law of returns.  The odds of receiving an inbound call with positive impact are reduced every time you call.  If you focus on an overall strategy of effective contact flow rather than a brute force campaign without thought or analysis, you will receive a better return and liquidation for your efforts, and the client will be far more satisfied with the results.

If you use a predictive dialer, do so with caution, and planning.


Building A Calling Strategy

A collection agency should have a strategy – not just for how to handle contacts with debtors, but how to handle missed contact attempts, and allow collectors some latitude to schedule follow up on promise payments or broken arrangements.  If your strategy is too tight, agents won’t have latitude to alter file turnover – if it’s too loose, you run the risk of individual agents overriding your general strategy.


It’s All About Contact

Collections isn’t about the number of calls made in a day, it’s about the number of right party contacts, and what is done with them.  You need to balance effort vs. return, and urgency vs. hostility.  If you have questions about how to run your contact plan as a credit manager or a collections department manager, I’d be happy to respond to any questions or inquiries about contact strategies.  You are certainly welcome to email me or call me at my office at Kingston Data and Credit.

Thanks kindly,


Blair DeMarco-Wettlaufer

Kingston Data and Credit

Cambridge, Ontario

226-444-5695

bwettlaufer@kingstondc.com