As your business grows, so will your collection department. This is not necessarily a bad sign, but does pose some new logistical challenges. It will become increasingly hard to spend large amounts of valuable time on every customer and success becomes more and more important to your bottom line. Here are four things to consider when developing your in house collection system.
Set your goals
This is a necessary first step and will from the framework for how your credit department is run. What level of cashflow do you need to generate? What percentage of your debt are you aiming to collect? How much do you want to spend on this effort? These are all questions you need to answer before you can even begin to set up your system.
Set your priorities
How do you plan to achieve these goals? Some business may find it is easier to collect on a large number of small balance accounts, while for others it may be easier to just focus on a few big accounts. These priorities will be affected by what goals you set above. For example, if you need to generate a large amount of cashflow but have few resources, then you may only be able to focus on the largest accounts.
Develop a routine
In order to achieve maximum efficiency, it is important to have a routine. Will only one collector be assigned to an account or will an account be handed off if payment can not be secured? How long will you wait before contacting a customer again? What is the maximum amount of times you will contact a customer before outsourcing the collection effort or pursing legal action? These answers will vary depending on the size of the account but should give you an idea of your overall routine.
Analyze and Optimize
It is important to continually try to perfect your system by analyzing results and seeing where you can improve. Maybe you over allocated time devoted to small accounts or maybe you could get it way with calling customers more frequently. Whatever the change may be, it is important to try new things and always attempt to improve your collection efforts.
A great credit system though is useless without great collectors. Here are some tips we give to people who want to be great collectors.