My clients tell me that they are adjusting processes to overcome pressure from staffing shortages and economic uncertainty. The last two years have been extremely challenging and the forecast for the next year appears to be no better. Supply chain issues, staffing shortages, inflation, and foreign unrest are just some of the issues that plague our economy. How do you manage your AR recovery process with less staff? How do you achieve complete coverage when you are short on staffing and your company is trying to reduce expenses?
Simple Adjustments Now to Prevent Backlogs
Many of my clients are encountering backlogs of accounts. During the pandemic, their collection policies were lenient as they tried to protect long-standing relationships through a challenging time. Unfortunately, collection processes and account coverage were further disrupted with work-at-home situations and employee attrition.
After two years of disruption, is your recovery approach still passive? Have you altered your approach to an assertive customer focused effort to contact past dues and achieve full coverage? Even with reduced staffing it is possible to reduce and eliminate backlogs.
We work with customers with the design of their internal account coverage processes. While most clients implement these processes on their own, sometimes our first party professionals make the outreach efforts in our clients’ name (transparent to your customers).
Prioritize Outreach to Achieve Full Coverage
To design a recovery program that achieves full coverage and avoids backlogs, we take into consideration:
- Past due balance of delinquent accounts
- The larger the balance, the more impact the account has on your aging. Every coverage plan ensures the largest accounts receive attention as frequently as they need it. In most instances that is once per week or more.
- Mid-sized accounts get attention; however, most of the time the frequency of the outreach is much less than larger accounts.
- The very smallest accounts require attention, however, the least amount of attention. While some credit managers hinder themselves by trying to always call small balances, there are many alternatives that may be more effective and efficient: email, text, statement, invoice copy, dun letters, etc. Let automation help you generate a positive response from your customer.
- Customer Type
- Prioritize out-reach by customer type. Your aging may benefit from prioritization by customer type, i.e. corporate account, house account, by sales division, etc.
- Receivable age should be factored in to your outreach. In-house efforts are most effective at the earliest stages of delinquency. As an account ages further past due, your in house efforts peak with incorporation of a final demand.
- Define the beginning and the end
- The most important element to your coverage plan is to define when it starts and ends. This allows you to maximize your internal pressure and to bring in a trusted partner when in house efforts are exhausted. It is important to not chase an account past the point of diminishing returns.
Next Steps; Overcoming Staffing Shortages
If you are dealing with the negative impact of staffing shortages, we are happy to help you with an assessment of your AR Recovery Process. Allow us to help you see where your system is tight and where it may need improvement. We want to consider your overall department headcount, account volumes, and consider different timelines depending on balance sizes.
For more than 50 years, Receivables Control has assisted companies wanting to improve their credit and collections procedures. In our experience, following a process is the most important piece to maximizing your portfolio’s performance. Our consultation is free, there is no charge for an assessment and most clients discover they can make internal adjustments that improve performance.
For any questions or feedback relating to credit and collections, please contact Josh Vidor at 763-315-9639.