In many companies, the collections department is seen as a sort of gatekeeper for the administration and resolution of deductions and other problems. The credit staff does not typically have the decision making power to finalize a resolution to problem receivables but needs to do all they can to make the process of getting decisions as streamlined as possible. Utilizing problem-tracking collections software is a huge step in the right direction and seems an obvious solution to an ongoing problem.
However, to do it right, seven critical functions need to be performed by problem tracking to assure a wide range of benefits.
Separately identify problems from other past due to items – Problem-tracking software can isolate problem receivables from those that have not been affected. These are then pulled out of the queue for appropriate dispute processing, leaving the routine collections issues to a collector who can then focus on the calls and contacts with the highest potential for collecting the most money as soon as possible.
Identify recurring deductions – Once identified, common problem types need to be grouped. Commonly recurring problems become more apparent when looked at in groupings, which is the first step in understanding their impact.
Allow quantification of problem types – Once grouped by type of problem, the total impact of each problem type can be quantified. This should be done for both closed issues as well as open items. By quantifying the impact of different problem types, you are then able to prioritize how they are addressed and in so doing minimize their impact.
Enable prescribed strategies to be used to resolveproblems – By using common problem codes, each code can be associated with a prescribed resolution strategy to guide the collector and keep the resolution process moving forward. By grouping similar types of deductions together in a user’s work queue, they can also be handled more productively. Collectors work more efficiently by repetitively processing all of one type together instead of jumping back and forth between different scenarios.
Track contacts with other internal functions – Problem-tracking software can aid in communications with the other departments affected by a particular type of problem. Everyone is then forced to address the problem in a standardized fashion, and capturing the communications facilitates finding permanent solutions to the repetitive issues.
Speed resolution – Problem-tracking software provides the collector/resolver with all the facts in one location so problems can be cleared faster. By helping document communications back and forth between internal groups and external customers, collectors are fully equipped to follow-up with any and all decision-makers until a problem is resolved. In short, the leg-work is done for the collectors so the focus can be put solely on the resolution.
Provide data for root cause analysis – When problem receivables are looked at in groups by type, quantifiable data is being collected regarding the commonality of a particular type of problem and the efforts needed to resolve it. The benefit is an insight into the root causes, which cannot be achieved without an end-to-end tracking process.
Like an impressionist painting that looks like specks of different colors until you step back and are able to see the greater image, you cannot get the same perspective on the issues plaguing your receivables department by trying to analyze problems one at a time. By utilizing problem-tracking software to group and sort, you are finally able to step back and see the big picture of where your vulnerabilities lie and where there is room for improvement. By working together with other affected groups to come up with resolutions for these recurrent problems, everyone wins.
Have you implemented any of these seven critical functions in your collections department? If so, which one(s) and how have they benefitted your department?
Most Popular Resources
Improve Cash Flow and Shorten Your Collection Cycles