Receivable/Accounts - Information for Credit and Collection Issues

Sunday, October 14, 2012

Dealing With Disappointment

When your credit or collections department is running smoothly, you can witness its success – payments constantly arrive by mail, courier, or EFT, there is a palpable hum of activity in your office, and your performance reports show that expectations are being met, or exceeded. That’s an advantage of working in the collection industry – the end results are empirical.

However, when revenue fails to flow for a particular staff member, there are collection managers who use this as the only measuring stick for how their staff perform, and failure to meet monthly revenue targets places a staff member is the crosshairs for reprimands, disciplinary actions, or even termination. This is a simplistic, and unfortunate, reaction.
If a staff member is failing, it means there is a flaw in a segment of the workflow – rather than aggressively pound on the staff members’ desk and demand more money appear instantly, the savvy collection manager should dig deeper into *why* the staff member is failing.

Failure To Communicate

Funds can only be collected when the message reaches the debtor, or debtor company. Whether it is by letter, email, or telephone, the message “this account must be paid” has to be received before payment will be received. If a collection agent is failing in meeting their daily targets on a regular basis, the very first thing that should be checked is (a) how many accounts is the collector working on a daily basis, and (b) of those files worked, how many right party contacts were made?
If you rely on an automated system such as a predictive dialer to reach consumers, this should be part of the analysis – what ratio of right party contacts are you achieving, and are inbound calls being fielded promptly. However, if there is a flaw in a dialer process, odds are you have an entire team that is failing, rather than an individual.

The Message Is Not Clear

If the collector has made sufficient contacts, but fails to turn those contacts into revenue, there is likely a flaw in the message, or the training they have received. I always have believed that a strong message with attention to language, tone, and pacing is imperative to successful collections. If a collector fails to create a sense of urgency, or maintain control over a call, right party contacts can be wasted, and even damaged for future attempts to collect from other staff members.

Listen to what the collector is saying, and reinforce proper work habits. Not every call will result in immediate payment, but certainly a certain percentage should result in immediate, or short-term revenue.

Environmental Issues

If the collector is assigned a monthly or daily target, this is usually based on an assumption of a certain amount of inventory assigned to that department or collector, a level of quality in the information provided about the debtor or debtor company, a certain liquidation rate that can be achieved, and the tools being available to the collector to assist them in recovering the accounts. Before attacking the collector for poor performance, attention should be given to the environmental issues outside of the collector’s control, and see if an outside influence is causing them to fail.

Outside Influences

Eventually, every collection agent will have a bad day. It happens to the most seasoned members of our industry. However, if a collector who usually excels at revenue targets suddenly has a downward trend of revenue, or consistently fails, and there are no issues related to inventory, it is entirely possible that some outside influences from the work process may be affecting them – job satisfaction, issues at home, conflict with co-workers, a loss of self-confidence, or worse. If this might be the case, management putting hard pressure on the staff member for failure to perform may aggravate the problem, and damage the staff member’s ability to collect, rather than solve the problem, and some empathy and communication might go a long way.

Inventory In, Revenue Out

If business isn’t assigned to a collection agent on a regular basis, revenue will simply not be extracted – there is a finite amount of liquidable revenue to be had from any given assignment. If a given client’s receivables can liquidate 40% of assignments, and that target has been achieved, with no assignments to the collector in two months, that staff member’s performance will plummet, without question. Keep an eye on inventory assignments and liquidation to date by assignment batch.

Are They Trying?

It takes a unique blend of skills to exceed in collections, and a perfect balance of accounts, attitude, tools, and focus to maintain high performance. If everything is in place to assist the staff member, but their work ethic or attitude change, it can be a damage their performance going forward. Some staff members take broken promises or failed goals personally, and “burn out”, while others who have done well in the past stop applying themselves mentally, and start coasting. Staff members need to be challenged to keep mental focus and engagement with their roles, and is part of the manager’s responsibility.

Fixing The Problem

Once the breakdown in process has been isolated, the important thing is to fix the problem – and that can only be done with the manager and the collector working together on the identified problem. A two-way conversation should happen between the staff member and manager, and both sides should work together to repair the shortfall. This can involve remedial training, adjustments to their work program, reviewing recorded calls together and pointing out errors, positive reinforcement where deserved, or some extra attention to that staff member’s daily performance going forward.

After all, with all the time and effort invested in acquiring and training a staff member, we want to plan to keep that person as a long-term asset of the team, right?

If your collection team consists of many people, inevitably some of your staff will stumble or fail to meet goals – be ready to help them along the way and quickly isolate the problem. Every team has different collection techniques, but all of them involve a work process.

If you have any questions about struggling collectors, work process, revenue targets, or liquidation I am of course happy to discuss these things. I can always be reached at my office at Kingston Data and Credit.

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit

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