If there’s one thing that’s true about the efficiency of business no matter what aspect of it you are discussing, it’s the fact that more efficiency in the workplace makes the entire system operate more smoothly, and usually at less cost too. The same can be said of the collection process, which is why you should be constantly seeking to improve both the system and the efficacy of your employees in achieving their objectives.
There are several ways to go about this, but knowing which improvements need to be made requires thorough analysis of the collection process. Maybe the team needs to be more efficient, or maybe the policy itself needs to be altered. Perhaps it would be best to let the entire process be handled by a collection agency? It all depends on what shortcomings you discover during the analysis of your company’s collection process.
Because the collection process is exhaustive in both time and resources, it’s important to estimate which option will actually be less costly for your company in the long run: hiring the services of a specialized collection agency or formulating your own internal collections division. Neither option is necessarily superior to the other, as they both have advantages and disadvantages. For instance, outsourcing the collection process to a collection agency means you don’t have to train your own employees to perform the same task, which consumes time and resources. On the other hand, collection agencies don’t care for the customer relationship, instead doing what they have to do to guarantee that the debt is collected. This can make it very hard to retain clients in these situations.
On the other hand, making your own internal collections unit also has pros and cons. Employees for your own company will be far more invested in ensuring a client stays with the company even after a collection, but on the other hand the internal unit will likely be more expensive, if only because of the cost of the specialized training they’ll need as well as the cost of supervision and management of a new branch within the company.
If you settle on an internal collections unit, there are many ways to improve their performance, chief among them choosing the optimal employees to fill particular roles in the process. You should also consider employee incentives, something that will motivate the unit as a whole to work towards more desirable results in the collection process. Everyone likes to be rewarded for a job well done, so imposing a reward for that work is fairly good practice.
In the end, different options work best for different companies. Some may find that enlisting the services of a specialized agency is the most practical choice, while other companies may find that organizing an internal collections unit serves their purpose best. Determining which one will serve your company most efficiently is simply a matter of careful analysis of your preexisting collections process or lack thereof, which makes the final decision obvious.
For a system that you will have to fall back on several times over the course of your business career, your need to have tried and true but more importantly clear cut and solid strategies and policies in place for everyone to follow. Policies and strategies such as this exist for the sole purpose of directing your employees’ actions under certain circumstances and guiding them on how to respond when things change. Having a good plan is critical to the overall success of the unit, even if that plan has to sometimes be altered on the fly or not used at all.
The first and most important policy to formulate for your collections team is how they are to initially contact past due clients. There are so many ways to go about it, there needs to be a guide that determines which tactic is most effective and when. Should the team contact them through phone, email, or a written letter, and how many days past due should first contact be? Moreover, you’ll need to lay out the rest of the procedure as well, such as how and when second and final contacts should be carried out. This is one of the most important strategies to formulate and clearly define for your team.
You will also need to set up policies for the handling of risk based collections. A lot of things can happen during the process that affect how it needs to be handled. Sometimes the client has suffered personal tragedy, and in that case your agents may need to approach them differently. You may also encounter issues with client excuses, clients unable to be contacted, and other problems and obstacles that you can’t expect to be part of the normal process for a collections officer. You need to lay out strategies and policies for your employees to use when these obstacles arise, in order to handle the situation as efficiently as possible.
You’ll probably also want to use a strategy that divides your clients into segments. Knowing your customer segments is a critical aspect of running any business, and it is exactly so for collections as well. Having different types of clients divided into groups that match the criteria you have set will make it easier to predict how they will be dealt with whenever particular situations arise. What criteria you use is completely up to you, but the most common criteria are location, solvency, ability to pay and attitude.
In the end, these defined strategies and policies will never be one hundred percent full proof. They will often need to be altered on the fly as situations change, but that doesn’t negate the useful nature of having a plan in the first place. Whether or not a plan is used it is always prudent to have one in place as the default method of reaction to obstacles and issues. How you go about establishing those strategies and policies is key to their success.
The collection process is infamous in both business and everyday life as one of the most frustrating hassles one can be involved with. Whether you’re trying to collect or someone is trying to collect from you, it’s always a tough process that spurs irritability and frustration. But as far as collecting goes, there are ways to improve the process and make it easier for your company, either by reducing the effort it takes to collect, or cutting down on the time it takes to collect money you are owed. With the right strategies you can often do both, and the top strategy for achieving that is proactivity.
What is Proactive Recovery?
Proactive strategy is the art of solving problems before they are even actual problems. Not only does the art of prevention make short work of issues that many businesses suffer from when they try to collect invoices and debts, but they are often less costly than rectification practices as well. Thankfully there are many proactive strategies to use in the collection process to optimise it.
The whole point or proactive strategies is to manage clients carefully before they are ever late on a debt. If you are careful about increasing the likelihood of a client paying, you’ll be more likely to avoid debts and late invoices at all.
One of the best ways to make sure that happens is to educate the client prior to disbursement. The more a client knows about the situation they’re getting into, the better. Having your clients be informed beforehand has a significant impact on reducing default rates, if only because the people who know what they are getting into and still do are more likely to follow through with their obligations.
Informing, informing, informing
This means informing the client of everything they need to know, such as the implications of getting a loan, how the product they are purchasing works, what the benefits for them would be if they pay on time, and what the payment schedule is like.
Another valuable proactive strategy is to address customer complaints as quickly as possible. Disgruntled customers are far more likely to default on payments, all the same as satisfied customers are more likely to pay on time. This is especially true if the customer is offering a valid complaint that has something to do with your product or your process, in which case you are practically obligated to rectify the issue. The less people complain about your company and the more they like about it, the more likely it is that they’ll put in the effort to pay their debts on time.
And of course, positive reinforcement is always an effective strategy. People like rewards, and rewards can often be more motivating than consequences. If there’s a good reason to pay on time aside from avoiding late fees, such as immediate renewal, clients will be even more likely to pay their debts on time, making positive reinforcement a truly effective proactive technique for your company’s collection process.
One advantage of being a freelancer is the freedom and advantages of choosing where you want to work from. Whether it be from home, a local cafe, in the library, or even in a park; freelancers have the liberty of being flexible in their workplace. Have you thought about your coworking space?
Coworking spaces are often a good solution for freelancers changing neighborhoods, according to their various contracts. These coworking facilities, which are now present in almost all major cities, allows independent work in a dynamic environment, facilitating meetings and above all, they are very nice!
But how do you choose a coworking space? These are the few tips from Dunforce.
What does the coworking space look like?
With over 250 coworking spaces in France , you are bound to find a suitable offer. There are many choices that offer different services and atmospheres. Coworking spaces can offer Wifi, printing, meeting or conference facilities, and if you are lucky, even coffee!
What options are there?
The answer is a lot! In general, you can find one that suits you quite easily. Some places are more suited to entrepreneurs and others to freelancers. The startup is also quite fond of those places that can offer them flexible schedules or access to software cost.
on average, prices range from 225 € per month (outside Paris,) and in Paris, prices rise to about 350 € per month!
What is the atmosphere?
In the end, everything is a matter of taste. Some areas are very simple, others very cozy, or tech savvy. You decide where you feel most comfortable. The trend is growing and everyone will be able to find a coworking space that is designed to meet their needs. Overseas, coworking spaces are inspired by the Bauhaus and even offer places design more than ever!
So, now that you understand how connected and stimulating coworking spaces can be, my advice is to find one and try it out. It will only please you!