Getting Collectors Involved In The Big Picture

So, you have a collection team involved in the process of representing your company, recovering doubtful accounts, diffusing complaints, managing insolvencies, and more.  Credit and collections touches on brand reputation, client support, accounting and finance, sales, and more – but how much are you sharing with the team on the ground that impacts all of these aspects of your company, or your clients in the case of a collection agency?

Good collectors don’t take things personally, when consumers get upset or accounts do not pay – they have to look at the big picture for monthly revenue goals, files to get through on a daily basis, or performance metrics the manger or client might give them, so why not involve them in showing how they impact the company as a whole?

Money, Money, Money

Yes, it’s all about collections of funds, on a daily, weekly or monthly basis – but what do the balances mean?  If the company wrote off $1 million dollars last year, and it was a 4% bad debt writeoff, then if the collection department recovers $250,000, that’s a big deal.  Breaking that down, $20,000 a month will have a huge impact on the company’s year end financials.

From the collection agency standpoint, liquidation is key – if that $1 million dollars above is assigned to the agency, $250,000 recovered by the agency is a 25% liquidation rate.  That’s what the agency will want to showcase to the client, and that’s what the agent needs to be aware of.  If an agent collects on a $10,000 account, that means overall, they’ve increased life-to-date liquidation for that client by 1%, which is a great step in the right direction.

As well, it’s worth looking at future forecasting.  If the collection agent is recovering for the client $10,000 a month, but has pre-authorized payments or credit card information to recover $100,000 over the next 12 months, that 1% liquidation a month can be forecasted to a future 10% liquidation, if nothing goes sideways.

Fallout, Side Effects, And Slash and Burn Farming

Collections is a remedy when things go wrong, and that can mean lost customers, bad debt that affects the company’s bottom line, negative Google business reviews, sales staff not explaining terms and agreements, or poor credit granting practices or a lack of upkeep on information.  So while the collection staff are trying to claw back doubtful accounts, they are also going to have insight after the fact and see patterns where the relationship with the customer broke down.  Using that information and intelligence, if the credit and collection staff are involved in process improvements, they can help firm up sales agreement terms, presentations to customers, credit adjudication and more, all of which are valuable in a proactive company.

Welcome To The Future!

Collections isn’t just about money – it’s about communication tools, social media reviews, brand reputation, and speed of response when sharing information with delinquent clientele.  Your collection staff can share with you, if you ask, where pain points are in technology.

I was hired many years ago as an Operations Manager for a collection agency, and one of the first things I did was put on a headset and sit on the collection floor for a week.  What I immediately noticed was it took upwards of 10 minutes to take a payment with the software available to collection staff.  By finding a problem in the process and technology, and beating the IT team with a wet noodle, I was able to get that down to 1 minute to process a payment – and of course, revenues went up about 10%.  It wasn’t about convincing people to pay, it was about the ability to process payments.

How To Share What We Know?

There are a lot of ways to bring your collection team into the big picture and sharing information. Here are a couple of ways to pass knowledge and collaborate, depending on your company’s structure.

à Get the management out of the office, and on to the floor.  Hewlett-Packard called it ‘walking management’, and it helps observe the work in process by the collection team and ask the team what is really happening on a daily basis

à Have regular, small meetings with the team.  Not chew-your-own-arm-off board meetings that are a waste of time, but a quick 5-10 minute huddle with the team and other members of the company and get feedback on one or two discussion points.

à Set up a mailing list, and share information both ways – management can share updates or ask questions, and team members can ask questions or float ideas publicly in front of the whole mailing list group

à Set up a task board, such as Trello (www.trello.com) to track problems and projects and give feedback to the team.  It’s free, and has benefitted our company in problem solving and sharing process improvements immeasurably.

Conclusion

I’m a huge fan of the big picture, and getting everyone who wants to be involved engaged in higher brain functions.  By doing this, your employees are more engaged and have opportunities to improve your company and grow into managers, and your company stays nimble and is constantly improving.  If you would like to discuss information sharing, Agile management, or technology that can improve your company, I’m always happy to talk and hear your thoughts.  Feel free to drop me a line or email me.

Thanks kindly,

Blair DeMarco-Wettlaufer

KINGSTON Data & Credit
Cambridge, Ontario
226-946-1730
bwettlaufer@kingstondc.com