Article published by Solutions Insurance Services August 13, 2009
Sunday, August 23, 2009
Friday, June 26, 2009
It takes time to collect...
It takes time, communication and hard work, to get great results from a third party collection account
Last week, a new client called me to discuss her account.
“I have to tell you that I am a little unhappy about how long it is taking your company to collect from those accounts I gave you a few weeks ago.”
“Well,” I asked, “Did you talk your collection manager?”
“Sure I did.” she said. “She told me you guys were making progress, but it has been three weeks already and I have not seen a dime yet! She keeps asking for more information.”
When you hire a third party collection agency such as ARI, it is very important at the outset of the relationship that you have realistic expectations about the collection process.
Like many other cases, with this client, we had only begun the calling process and had just sent a letter –and she was already calling in for status.
My client, who was a startup business owner and new to the collection process, had the wrong idea that once she handed over her receivables to our company, that it wouldn’t take long before the cash would start rolling in.
In fact, when she handed over her accounts receivable, much of the information about the debtors was incomplete and the amounts to be collected were inaccurate.
The collection of bad debts can be a detailed process. To do it right, it involves time, research, and persistence on behalf of the third party collection agency.
An effective third party collection is an actual process that takes research and planning to ensure success. The information must be accurate.
We need to know basically the debtor’s financial life story so that we can be effective in negotiating the payment.
Therefore it can take a few business days just to work up a file before we begin communicating with the debtor.
So I explained to my client that the day she placed her accounts with us, we started a step by step process that involved a systematic review of the accounts and the building of a specific collection plan.
I also told her that it could take months to achieve the results she was looking for on some of the accounts. I emphasized that she had to continue to communicate accurate information about her accounts to her collection manager.
In order to help your third party collection agency be effective from the get go, there are three important steps a business owner should take in evaluating and setting expectations for collecting:
1) The amount placed with a collection agency must be as accurate as possible. Often, collection agencies are inundated with “inflated” receivables that can take more time to settle because they are inaccurate or even dishonest. If the amount to be collected is accurate, it is very likely that the account will settle sooner than later.
2) The business owner must establish a realistic goal of how much is to be collected and how long it will take- in other words, he or she communicate how much he or she is willing to settle for in cash on each debt to the collection manager handling the account.
3) The business owner and the collection agency must immediately establish a line of communication between not only with the account representative from the collection agency who establishes the collection relationship, but also the collection manager who is actually handling the account. It is very important for the business owner know that the collection manager is the one actually working to collect the debts. It is important to talk to the collection manager and feel trust and confidence in that person.
Have you recently taken the time to evaluate the status of your account receivables? Are you collecting on your accounts receivables or don’t you have the time to properly address them?
It may be time to outsource your accounts receivables to ARI. From the point invoice data is available, through the posting of cash received, ARI allows its customers to concentrate on their core business, secure in the knowledge that the Accounts Receivable portion of its business is professionally, accurately and securely performed.
For further information, please visit our website http://www.4aronline.com/ or call ARI Vice President Melissa Nash Andrews at 561-697-4911. You can also email her at melissa@4aronline.com today.
Melissa Nash Andrews is the Vice President of Accounts Receivable, Inc. and the author of “How to Get Paid On-Time, Every Time”
Last week, a new client called me to discuss her account.
“I have to tell you that I am a little unhappy about how long it is taking your company to collect from those accounts I gave you a few weeks ago.”
“Well,” I asked, “Did you talk your collection manager?”
“Sure I did.” she said. “She told me you guys were making progress, but it has been three weeks already and I have not seen a dime yet! She keeps asking for more information.”
When you hire a third party collection agency such as ARI, it is very important at the outset of the relationship that you have realistic expectations about the collection process.
Like many other cases, with this client, we had only begun the calling process and had just sent a letter –and she was already calling in for status.
My client, who was a startup business owner and new to the collection process, had the wrong idea that once she handed over her receivables to our company, that it wouldn’t take long before the cash would start rolling in.
In fact, when she handed over her accounts receivable, much of the information about the debtors was incomplete and the amounts to be collected were inaccurate.
The collection of bad debts can be a detailed process. To do it right, it involves time, research, and persistence on behalf of the third party collection agency.
An effective third party collection is an actual process that takes research and planning to ensure success. The information must be accurate.
We need to know basically the debtor’s financial life story so that we can be effective in negotiating the payment.
Therefore it can take a few business days just to work up a file before we begin communicating with the debtor.
So I explained to my client that the day she placed her accounts with us, we started a step by step process that involved a systematic review of the accounts and the building of a specific collection plan.
I also told her that it could take months to achieve the results she was looking for on some of the accounts. I emphasized that she had to continue to communicate accurate information about her accounts to her collection manager.
In order to help your third party collection agency be effective from the get go, there are three important steps a business owner should take in evaluating and setting expectations for collecting:
1) The amount placed with a collection agency must be as accurate as possible. Often, collection agencies are inundated with “inflated” receivables that can take more time to settle because they are inaccurate or even dishonest. If the amount to be collected is accurate, it is very likely that the account will settle sooner than later.
2) The business owner must establish a realistic goal of how much is to be collected and how long it will take- in other words, he or she communicate how much he or she is willing to settle for in cash on each debt to the collection manager handling the account.
3) The business owner and the collection agency must immediately establish a line of communication between not only with the account representative from the collection agency who establishes the collection relationship, but also the collection manager who is actually handling the account. It is very important for the business owner know that the collection manager is the one actually working to collect the debts. It is important to talk to the collection manager and feel trust and confidence in that person.
Have you recently taken the time to evaluate the status of your account receivables? Are you collecting on your accounts receivables or don’t you have the time to properly address them?
It may be time to outsource your accounts receivables to ARI. From the point invoice data is available, through the posting of cash received, ARI allows its customers to concentrate on their core business, secure in the knowledge that the Accounts Receivable portion of its business is professionally, accurately and securely performed.
For further information, please visit our website http://www.4aronline.com/ or call ARI Vice President Melissa Nash Andrews at 561-697-4911. You can also email her at melissa@4aronline.com today.
Melissa Nash Andrews is the Vice President of Accounts Receivable, Inc. and the author of “How to Get Paid On-Time, Every Time”
Friday, June 12, 2009
The value of an internal collection plan is priceless
I have a really important question for you.
Do you have an internal collection plan for your business? And, if the answer is yes, do you follow it?
Many small business owners often implement critical marketing and sales strategies. Yet, they often fail to properly address and plan a vital component that ensures the health and success of their business: an internal collection plan as part of an overall Accounts Receivable strategy.
Most small business owners understand that an internal collection plan is an essential element of an overall Accounts Receivable component of a business, but fail to make it a priority.
An internal collection plan is an important element of any best practices plan for a company.
Why is the accounts receivable component of a business and an internal collections plan so important?
The planning and implementation of your collection plan is essential to guarantee cash flow which provides critical working capital to the business.
The bottom line is that a utilized collection plan will result in fewer outstanding account balances, enhance cash flow, cause fewer bad-debt write-offs, and help achieve and maintain profitability.
There are three critical components of a company’s accounts receivable department. They are:
- Credit policies and management-Credit management which includes communication of credit policies, credit checks and approvals, including credit maintenance;
- Good Billing Practices-timely and systematic invoicing of customers;
- Internal Collection Plan-Collections encompassing methods to monitor and remain proactive rather than reactive.
The objective of having an internal collection plan is for the small business owner to take a positive, PROACTIVE approach to getting paid rather than dealing with collections as a problem threatening the growth and viability of the company.
An internal collection plan should include:
- Making collections a major priority along with sales, marketing and other important functions of the business.
- Establishing collection goals and time limits as part of an overall Accounts Receivable strategy.
- The establishment of systematic billing practices and monitoring of payments for a company’s goods and services.
- The integration of good customer service practices with the timely collection of accounts receivables-customer satisfaction can be gauged by the timely payment for goods and services and can be used to learn more about your customers.
- Monitoring credit limits and performing periodic credit checks after credit is granted.
- Establishing a systematic assessment review of collection practices of the progress, quality and attainment of collection objectives at defined milestones.
In many cases, a typical small business owner is busy managing the day to day operations of a business performing critical functions such as salesman, manager, human resources director, etc. and typically has little time to effectively implement a dynamic Accounts Receivable component that includes an internal collection plan.
That’s where my company, Accounts Receivables, Inc. (ARI) comes to the rescue! ARI offers a unique beginning-to-end solution designed to consult, develop and transact a small business internal collection plan and to transform the operation of a small business Accounts Receivable processes.
From the point invoice data is available, through the posting of cash received, ARI allows its customers to concentrate on their core business, secure in the knowledge that the Accounts Receivable portion of its business is professionally, accurately and securely performed.
An extensively trained and experienced consultant from ARI can evaluate your collection needs, strategies, and goals, and prepare and implement the critical internal collection plan your business needs to guarantee cash flow, profitability, and success.
For further information, please visit our website http://www.4aronline.com/ or call ARI Vice President Melissa Nash Andrews at 561-697-4911 . You can also email her at melissa@4aronline.com today.
Melissa Nash Andrews is the Vice President of Accounts Receivable, Inc. and the author of “How to Get Paid On-Time, Every Time”
Thursday, March 12, 2009
Credit Management for Professional Services
I was at lunch today, and one of my architectural clients was telling me about a Doctor complaining that he wanted a retainer before he started work. Now we would all think that there shouldn't be a problem with Dr. Client paying his bill, and ability isn't the question. This client was diligent and used my exact response - Doctors are paid at time of service, we've only asked for a portion at time of service... why should your service be any different? Do you find yourself leaving your operating policies? Do you step away from your proposals original terms and conditions?
Credit Applications and well defined terms and conditions can lay out the relationship - when you're best friends with your client. I'd love to hear about your successes or pot holes to support a new book. Most Professionals sell time - or a service - and after you are no longer in pain or sick, the intangible product is hard to validate.
I have a few "tricks" of the trade... let me show them to you!
Melissa Nash Andrews
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