Introduction
Collectors who excel are often stereotyped as slick talkers who can squeeze water out of a rock. In reality, those who know how to best manage their time – using this limited resource to stay on top of debtor communications while streamlining the collections process – consistently perform above the norm. At the same time, collectors that rely on paper-based tools such as calendars or ticklers, computer printouts, written notes, and paper files are hard-pressed to make the best use of their time.
Keep All Credit and Collection Information Together
Marking notes on a print copy of the receivables aging report remains common practice with far too many collectors. Doing this does not leave any permanent record of collection activities and even more, time is consumed if the notes are subsequently transferred to the next printout or a call log. Ideally, call notes should be recorded in the credit or receivables software system during the call. Even greater efficiency is achieved when payment promises and other follow-up activities are recorded within the software, and therefore available as triggers for an automated workflow engine.
Clear visibility of a customer’s status and past activities is a primary driver of collector productivity. The idea is to provide collectors with a single source for all customer credit information, so they can then use their time doing actual collections rather than a host of clerk-like support activities.
Make Sure Contacting Customers Comes First
With uninhibited visibility of their accounts, collectors are provided with actionable intelligence. Required with this is a commitment to contacting delinquent accounts. A simple way to start involves blocking out large chunks of time on your calendar for exclusively communicating with customers. Schedule additional time for follow-up activities to avoid interference with your collection efforts. When contacting delinquent accounts is the number one priority, collectors will facilitate increased cash flow.
It’s Just a Numbers Game
Since a collector can rarely call every single past due client during a month, many collection departments don’t consider an account past due until it has hit 15 or 30 days late. Customers aren’t stupid; they figure out this implied grace period and will withhold payment as long as they can (it’s so common it has a name: Payment Timing Optimization). What you need to do is figure out the most effective collections strategy. By streamlining all activities having to do with past due accounts and finding the best combination and sequence of automated correspondence and phone calls you can get full coverage of all your past due accounts without having to push back when you begin making contact.
Maximum Cash Flow is Achieved through Prioritization
To maximize your cash flow, debtors should not be contacted based on a scheme that involves working alphabetically through the AR portfolio or contacting accounts with the oldest balances first. Instead, accounts that have not paid as promised or who otherwise are scheduled for follow-up need to be contacted first. Then go for the largest past due accounts no matter how old they are. You should also breakdown your portfolio of past due balances by the type of task or contact needed. For example, with an automated collection software tool, you can initially contact via email or fax all your small balance accounts at once. Batching tasks help your time-management effectiveness.
The simple truth is, your collection efforts cannot be truly effective unless there is clear visibility of both individual customers and overall portfolio status. Because of this, collection processes that are reliant on manual tasks and paper documents are intrinsically inefficient.
Download David Schmidt’s whitepaper on, “The Imperative for Eliminating Paper from Receivables and Credit”
