Why do many companies struggle to manage their receivables?

Since strong customer contact processes (collection calls) and techniques are a foundation to strong cash flow and receivables performance, there is a good chance there are flawed or weak processes in the customer contact function. Download our executive report Six Scenarios that Lead to Under Performing Receivables. Companies finding one or more of these scenarios within its organization expose themselves to under performing receivables. The six scenarios are summarized below. The complete report can be downloaded here.

  1. Thinking a "collection call" is an aggressive, negatively toned communication with a customer that is past due. Note – the opposite is true over 95% of the time
  2. Under utilizing properly conducted collection calls as a primary tool for generating cash. Note – Make no mistake, those placing calls in an effective and systematic manner are getting paid sooner and have stronger receivables performance.
  3. Collection calls are encouraged, but one of many other duties assigned to staff. Completion of the other duties is readily visible, but completion of collection calls is not. Note – can you guess which duties get performed regularly and well? 
  4. Not understanding that problems created by one’s own organization are a leading reason for delayed payments. Note – Learning of problems and acting quickly is the key. Unfortunately most companies fail miserably in this area.
  5. Inadvertently allowing customers to pay slowly by using the standard accounts receivable aging, credit holds or a “dial for dollars” approach to drive collections calls. Note – Even if collection calls are encouraged, using the standard accounts receivable aging, credit holds, or a “dial for dollars” approach to driving collections calls can teach customers to delay payment.
  6. Lack of a centralized system for managing customer contact that captures, stores and distributes critical information throughout the organization. Note – Few computer systems come close to actually facilitating an effective collection process. Effortlessly documenting and sharing information throughout the organization is key. Using spreadsheets, manually creating reports and gasp… hand written collection notes should be a thing of the 1980’s and 90’s.