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.
With success stories like Paypal or Dropbox, Plug and Play is considered as one of the best accelerator of the world. Associated with the French bank BNP Paribas, they selected this month 10 Fintech startups, with Dunforce !
This new edition of the Plug and Play program offers Silicon Valley’s expertise and the ecosystem of an international bank to its selected startups. The disruption of banking and financial sectors is at stake.
The BNP Paribas – Plug and Play accelerator offers exclusive services during 3 months to 10 worldwide selected startups. The ambition is to build concrete commercial opportunities with big corporations, in the context of a beneficial partnership.
Dunforce will access, on the one hand, to the large international network of Plug and Play as an investor and expert, and on the other hand, to the main innovation heads of the big european banks.
« It’s an amazing opportunity to accelerate our growth. We already benefit from the support of Telefonica in Spain. Now we have the opportunity to settle on the French market, with some prestigious partners and concrete projects. », highlights Alban Sauvanet, co-founder of the Fintech startup.
Meet us in our new Paris offices, rue de Ponthieu. Starting mid-April 2017.
Plug and Play Tech Center is a technological worldwide accelerator among the biggest in the world. Since its creation in 2006 in San Fransisco, it counts more than 350 startups and 300 partners companies.
BNP Paribas is one of the main bank in Europe with an international standing. It is present in 74 countries, with more than 190.000 employees, and almost 146.000 in Europe.
Dunforce offers a smart and automated treatment of invoices, with technologies like machine learning and Big data. Companies benefit from Robotic Process Automation (RPA) that allows them to optimize their customer receivables management, from sending to paiement, from reminder to reconciliation.