How do you find good collectors? That was a question posed to me recently and my answer was, you have to know what you’re looking for. Too often, companies make bad choices when they select their credit manager or collection supervisors. As long as the credit function falls under Finance or Accounting, accountants will hire the credit / collection group. To the detriment of the goals and objectives of the company, accountants hire accountants to do the collection work.
In his book, “Taking Care of Business” the eminent psychiatrist David Viscott, M.D. describes three basic personality types: dependent, controlling and competitive.
A customer service rep may be a good example of a dependent type. Someone who needs to belong to a group, needs a routine and security and yearns for stability. They are not generally, leaders. They require a lot of supervision and they will follow whoever gives them the most attaboys.
Good examples of a competitive type are sales people. Like sports competitors, sales reps are goal oriented, driven to be recognized for their accomplishments, striving to improve on their numbers, be it sales units or dollars sold.
Good credit people should fit the competitive type. You want someone who sees collections as a game. Collecting the money is the objective. Good collectors strive to collect more money, or a higher percentage of the receivable, or whatever goal is set out for them. They want to be recognized for the work they do and they need benchmarks. Set a target and they will go after it.
Controlling types are people who, according to Dr. Viscott, “want to control you, write the rules, define the terms, and give the directions.” He continues, “They are rigid, ruled by precedent, and are likely to be limited in their creativity. Since controlling people are loyal only to the things that give them power, others do not feel loyal to them.”
This may describe a stereotypical credit person. However according to Dr. Viscott, controlling types “number all the top accountants”.
Managers look not only at experience and expertise when they are hiring. They also consciously or unconsciously consider their compatibility. You are going to hire someone you can get along with.
A sales manager will hire a young protégé, someone with the same competitive spirit, energy and drive. A controller will be looking for someone who is organized, systematic, and attentive to detail. They also tend to hire like personality types. Controlling types hire other controlling types. So, rather than hire a go-getter collector, they hire someone, like themselves: one who manages “by intimidation and manipulation not by understanding.”
In short, accountants are probably not likely to seek a competitive person for a collection spot, just like they would not consider a competitive type to calculate the budget because, accountants are not comfortable with other personality types. Thus, they hire the wrong person for the job.
End this trend, and let CreditPowers help you find the right candidates for your credit needs. We know what you are looking for.
For more information e-mail us at patrickpowers@sbcglobal.net
Monday, September 29, 2008
Monday, September 22, 2008
CreditPowers Saves the Day
It was a cool fall morning. I was sitting in my office trying to master spider solitaire when the phone rang. She had one of those voices that made you think of possibilities.
“Please, you have to help me.” Her tone was desperate. “One of our customers is refusing to pay. He owes over $115,000.00. If my boss finds out he’ll fire me.”
“Tell me about it.” I said coolly.
“We sold him material for an office building and now he said he won’t pay unless we give him a huge discount.”
Someone was taking advantage of her inexperience and I didn’t like it. “Sounds like extortion to me.” I said, “Can you lien the job?”
“Yes, but he said he’d just bond around it.” She was not sure what that meant, but she knew it was bad.
“That’s not a bad thing.” I told her, reassuringly. “In fact it could be a good thing.” I told her why. It kept her from sobbing, but she was still afraid.
“It could still take months. We'll have to find a lawyer and it could get so expensive. My boss will have a fit.”
Bosses have fits like some people get hunger pangs. “Any chance there’s a construction loan?” I asked, hopefully.
I heard the rustling of papers. “As a matter of fact, there is.” She said in a voice that sounded like she’d been running.
I leaned back in my chair. The sun had broken through the morning gray. It was going to be a good day after all. “Do what I tell you and your boss will treat you like a hero.” I told her how to file a bonded stop notice.
She called me about two weeks later. “I could kiss you.” She said. She was bubbly, like French champagne. “I did just as you said, and the general contractor called up and asked me why we’d sent the big guns in. He said the bank was in a panic and they refused to disburse another penny until this was cleared up. The owner was so furious he had to be restrained. They cut us a check for the full amount and sent the subcontractor packing.”
“Glad I could help.” I said. Good things happen when you contact CreditPowers. We have the answers.
For more information e-mail us at patrickpowers@sbcglobal.net
“Please, you have to help me.” Her tone was desperate. “One of our customers is refusing to pay. He owes over $115,000.00. If my boss finds out he’ll fire me.”
“Tell me about it.” I said coolly.
“We sold him material for an office building and now he said he won’t pay unless we give him a huge discount.”
Someone was taking advantage of her inexperience and I didn’t like it. “Sounds like extortion to me.” I said, “Can you lien the job?”
“Yes, but he said he’d just bond around it.” She was not sure what that meant, but she knew it was bad.
“That’s not a bad thing.” I told her, reassuringly. “In fact it could be a good thing.” I told her why. It kept her from sobbing, but she was still afraid.
“It could still take months. We'll have to find a lawyer and it could get so expensive. My boss will have a fit.”
Bosses have fits like some people get hunger pangs. “Any chance there’s a construction loan?” I asked, hopefully.
I heard the rustling of papers. “As a matter of fact, there is.” She said in a voice that sounded like she’d been running.
I leaned back in my chair. The sun had broken through the morning gray. It was going to be a good day after all. “Do what I tell you and your boss will treat you like a hero.” I told her how to file a bonded stop notice.
She called me about two weeks later. “I could kiss you.” She said. She was bubbly, like French champagne. “I did just as you said, and the general contractor called up and asked me why we’d sent the big guns in. He said the bank was in a panic and they refused to disburse another penny until this was cleared up. The owner was so furious he had to be restrained. They cut us a check for the full amount and sent the subcontractor packing.”
“Glad I could help.” I said. Good things happen when you contact CreditPowers. We have the answers.
For more information e-mail us at patrickpowers@sbcglobal.net
Monday, September 15, 2008
First Aid For the Credit Department
Typically, when management is unhappy with the performance of their credit department, they replace the credit manager. The hope is a new sheriff will bring fresh ideas and a change in direction. Most of the time, management knows something is wrong, they just do not know what it is. They are relying on the new person to figure it out and fix it.
When a company follows this course, all they are doing is exchanging one set of experiences for another. Credit managers bring experience and some level of know how. If something changes with an organization, the credit manager may or may not be equipped to handle it. So, the company looks for another one, with the kind of experience that fits the current problems
The accounts receivable will continue to decline during the duration the new credit manager gets familiar with the lay of the land. Usually this process faces delays as the new manager deals with all the fires that have flared up. Then there is that period when change is recommended, accepted and implemented. This assumes the new person will actually come up with a workable plan of action. This is followed by measuring the changes and assessing the results. Hopefully, management made the right choice and the downward trend is finally reversed. The turnaround process could take somewhere between six to twelve months.
The company might be better served to turn to CreditPowers. Not only do we have the experience, we know how to make some immediate assessments, work with the current credit team, make recommendations, implement and train the staff and follow up as needed. Consider it a quick start for your credit department.
First, we look at the current situation. This involves a discussion with management and a review of the accounts receivable over a period of the last three or four months. Equipped with these findings, CreditPowers will go to work, meeting with the current credit department, making recommendations while evaluating the staff. Further recommendations can be made as a result of this session. Implementation and the necessary training begin simultaneously. All the while, there is no interruption of the current work flow. There is no period of adjustment, acquainting or reflection. We go to work to fix the problems immediately. The accounts receivable can begin to recover without any further delay. That translates into improved cash flow, improved morale, better efficiencies and increased production.
CreditPowers comes with a proven collection strategy, a method to bring the credit group and the sales team together, a system of bench marks and assessments and resources.
For more information, e-mail us at patrickpowers@sbcglobal.net
When a company follows this course, all they are doing is exchanging one set of experiences for another. Credit managers bring experience and some level of know how. If something changes with an organization, the credit manager may or may not be equipped to handle it. So, the company looks for another one, with the kind of experience that fits the current problems
The accounts receivable will continue to decline during the duration the new credit manager gets familiar with the lay of the land. Usually this process faces delays as the new manager deals with all the fires that have flared up. Then there is that period when change is recommended, accepted and implemented. This assumes the new person will actually come up with a workable plan of action. This is followed by measuring the changes and assessing the results. Hopefully, management made the right choice and the downward trend is finally reversed. The turnaround process could take somewhere between six to twelve months.
The company might be better served to turn to CreditPowers. Not only do we have the experience, we know how to make some immediate assessments, work with the current credit team, make recommendations, implement and train the staff and follow up as needed. Consider it a quick start for your credit department.
First, we look at the current situation. This involves a discussion with management and a review of the accounts receivable over a period of the last three or four months. Equipped with these findings, CreditPowers will go to work, meeting with the current credit department, making recommendations while evaluating the staff. Further recommendations can be made as a result of this session. Implementation and the necessary training begin simultaneously. All the while, there is no interruption of the current work flow. There is no period of adjustment, acquainting or reflection. We go to work to fix the problems immediately. The accounts receivable can begin to recover without any further delay. That translates into improved cash flow, improved morale, better efficiencies and increased production.
CreditPowers comes with a proven collection strategy, a method to bring the credit group and the sales team together, a system of bench marks and assessments and resources.
For more information, e-mail us at patrickpowers@sbcglobal.net
Monday, September 8, 2008
It’s Not Rocket Science…It’s Magic!
How hard can it be to collect money? You call up the customer, remind him what he owes, because surely it’s just an oversight that he hasn’t paid yet and… presto, a check is put in the mail. It’s so easy a billing clerk can do it.
How hard can it be to extend credit? A promising prospect sends in a credit application with all of the information you’ll ever need and… presto, you open the account. It’s so easy even a customer service rep can do it.
The customer gets a little behind, so what do you do? Put him on C.O.D. until he pays down the balance. Presto! Problem solved. In fact, you can accelerate the process by applying all of the C.O.D. payments towards the old delinquent balance. That’ll make that old balance disappear in a flash.
The customer’s orders exceed his credit line causing a delay in the processing. What to do? Increase the credit limit, of course! Presto! Problem solved!
This must be why there is no college degree in Credit Management. It just does not require that many skills. Some common sense and the ability to operate a telephone are all it takes. Anyone can do it.
Ask anyone doing the job and you’ll probably get another perspective. You call the customer, remind him what he owes and he lies to you. Now you have to call him again and he lies to you again.
The information on the credit application looked so good, the customer seemed to be so honest, but the mail, particularly your invoices, keep coming back marked, “no such address”.
You put the customer on C.O.D. but he just stopped buying altogether. Now what?
Suddenly it’s not so easy.
Perhaps credit work does take more than a pleasant telephone voice. Maybe a degree from Hogwarts School of Witchcraft and Wizardry would be beneficial. When you come down to it, to do the job well, credit managers must have the ability to read minds, predict the future and perform occasional acts of magic.
When the customer says he’s putting a check in the mail on Friday, it takes a pretty good mind reader to determine which Friday he’s referring to. You can pin him down to a specific date and time, but you still have to read his mind to determine if his intentions are pure.
When considering a credit application, you are actually attempting to predict the customer’s probable payment patterns as well as his longevity and financial soundness. In laymen terms that is predicting the future, pure and simple.
Then, the corporate account defaults and files bankruptcy but you pull out that personal guarantee and you find the principal has property he’s trying to protect. He pays you in full. Now, that’s pulling a rabbit out the hat!
You want a credit department that can predict the future, read minds and work magic? Contact CreditPowers. We can do the trick. We will evaluate the credit staff, give them the necessary tools, show them the way, and abracadabra, your receivables will be back in shape in no time.
For more information, e-mail us at patrickpowers@sbcglobal.net
How hard can it be to extend credit? A promising prospect sends in a credit application with all of the information you’ll ever need and… presto, you open the account. It’s so easy even a customer service rep can do it.
The customer gets a little behind, so what do you do? Put him on C.O.D. until he pays down the balance. Presto! Problem solved. In fact, you can accelerate the process by applying all of the C.O.D. payments towards the old delinquent balance. That’ll make that old balance disappear in a flash.
The customer’s orders exceed his credit line causing a delay in the processing. What to do? Increase the credit limit, of course! Presto! Problem solved!
This must be why there is no college degree in Credit Management. It just does not require that many skills. Some common sense and the ability to operate a telephone are all it takes. Anyone can do it.
Ask anyone doing the job and you’ll probably get another perspective. You call the customer, remind him what he owes and he lies to you. Now you have to call him again and he lies to you again.
The information on the credit application looked so good, the customer seemed to be so honest, but the mail, particularly your invoices, keep coming back marked, “no such address”.
You put the customer on C.O.D. but he just stopped buying altogether. Now what?
Suddenly it’s not so easy.
Perhaps credit work does take more than a pleasant telephone voice. Maybe a degree from Hogwarts School of Witchcraft and Wizardry would be beneficial. When you come down to it, to do the job well, credit managers must have the ability to read minds, predict the future and perform occasional acts of magic.
When the customer says he’s putting a check in the mail on Friday, it takes a pretty good mind reader to determine which Friday he’s referring to. You can pin him down to a specific date and time, but you still have to read his mind to determine if his intentions are pure.
When considering a credit application, you are actually attempting to predict the customer’s probable payment patterns as well as his longevity and financial soundness. In laymen terms that is predicting the future, pure and simple.
Then, the corporate account defaults and files bankruptcy but you pull out that personal guarantee and you find the principal has property he’s trying to protect. He pays you in full. Now, that’s pulling a rabbit out the hat!
You want a credit department that can predict the future, read minds and work magic? Contact CreditPowers. We can do the trick. We will evaluate the credit staff, give them the necessary tools, show them the way, and abracadabra, your receivables will be back in shape in no time.
For more information, e-mail us at patrickpowers@sbcglobal.net
Wednesday, September 3, 2008
Tough Times Trigger Changes
Times are tough. Your business is seeing a decline in sales and declining revenues. To make matters worse, your accounts receivable, which you’ve always relied on as a source of immediate cash, is not turning like it should. Delinquencies and defaults are up. The reserves are at record levels and the receipts are sluggish. The customers you do have are paying slower and you are afraid to scare them away.
You expect your sales team to get creative and find new customers. You expect operations to be more efficient and cost conscious. You expect your collection group to collect more money.
What does the collection group say? They’re doing everything they can. You can’t get blood from a turnip. If they tighten credit, they’ll drive off the customers. If they loosen up, delinquency will surely rise. What can they do differently?
Consider that very often, collection procedures do not change in good times or bad. In bad times particularly, senior management will demand more focus be put on the very past due columns. Everyone is hammering at twenty per cent or less of the accounts receivable that is made up of accounts either paying a little every month or are very close to becoming a legal or a collection agency assignment. However, this may have been the collection strategy all along. Perhaps the collection group has never tried to collect more current receivables.
It is also possible the collection group treats every past due amount equally, meaning that as much time is spent on small amounts as are spent on the larger amounts which equates to not enough time is spent where it belongs. The collection group may be spending too much time on non-collection issues. The sales group is eager to have the credit applications processed, the customers are looking for invoices and proof of deliveries, and they expect someone to respond promptly to credit rating requests. All of these responsibilities can drown a credit department. In these conditions follow up suffers and good follow up is key to successful collections.
This is where CreditPowers can help. We can evaluate your current collection trends and practices. We can provide tools that will improve collections and motivate the staff. We can provide a sure fire collection formula that will reduce delinquency. We can train the collection group and make them better collectors and we can help reallocate their resources so that they can be more productive.
For more information, e-mail us at patrickpowers@sbcglobal.net
You expect your sales team to get creative and find new customers. You expect operations to be more efficient and cost conscious. You expect your collection group to collect more money.
What does the collection group say? They’re doing everything they can. You can’t get blood from a turnip. If they tighten credit, they’ll drive off the customers. If they loosen up, delinquency will surely rise. What can they do differently?
Consider that very often, collection procedures do not change in good times or bad. In bad times particularly, senior management will demand more focus be put on the very past due columns. Everyone is hammering at twenty per cent or less of the accounts receivable that is made up of accounts either paying a little every month or are very close to becoming a legal or a collection agency assignment. However, this may have been the collection strategy all along. Perhaps the collection group has never tried to collect more current receivables.
It is also possible the collection group treats every past due amount equally, meaning that as much time is spent on small amounts as are spent on the larger amounts which equates to not enough time is spent where it belongs. The collection group may be spending too much time on non-collection issues. The sales group is eager to have the credit applications processed, the customers are looking for invoices and proof of deliveries, and they expect someone to respond promptly to credit rating requests. All of these responsibilities can drown a credit department. In these conditions follow up suffers and good follow up is key to successful collections.
This is where CreditPowers can help. We can evaluate your current collection trends and practices. We can provide tools that will improve collections and motivate the staff. We can provide a sure fire collection formula that will reduce delinquency. We can train the collection group and make them better collectors and we can help reallocate their resources so that they can be more productive.
For more information, e-mail us at patrickpowers@sbcglobal.net
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