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Improving productivity is about working smarter, not working harder. Performance measures are a tool to help us understand, manage and improve what our organizations do. Productivity indicates a technical relationship [...]

Two years ago, International Playthings Inc. was doing business the old fashioned way--faxes, letters of credit, and a great deal of sitting around and waiting for various documents. There weren't [...]

The age of technology has revolutionized and diversified the ways in whic we conduct business. Transactions are no longer bound to person-to-person exchanges, and we now have a multitude of [...]

Thirty days have passed. Payment is still not received. With effort, you reach the accounts payable rep. When that accounts payable rep tells you that they cannot pay because the [...]

Recovering preferential transfers is ideal prior to filing for an involuntary bankruptcy petition. It is also the core of the Bankruptcy Code's protections of ensuring equal treatment of vendors. Vendors are reminded that they must determine that they are filing for a proper purpose before they commence the involuntary petition and that they have a good faith basis in believing the petition will be allowed to stand. Those who are motivated to file the petition to preserve the reach back period to retrieve preferential transfers is not at all in bad faith., In evaluating various collection remedies, vendors collectively may find the commencement of an involuntary Chapter 7 or Chapter 11 bankruptcy petition (the Bankruptcy Code excludes Chapters 9, 12 and 13 [...]

'I don't know why it's such a hassle getting paid. These guys never pay their monthly storage bill until they need their equipment at the beginning of the summer.' A [...]

Collection procedure The collection of outstanding receivables is as much a responsibility of the credit department as the investigation, evaluation, and approval of the customer's credit. The collection effort should [...]

Product or service companies with small business accounts and individual customers can benefit substantially from direct debit programs. These programs are electronic commerce applications that can process recurring payments and streamline the collection process. Such programs also allow easier receipt of customer payment and payment applications without requiring additional staff., In today's fast-paced and ever-changing world, we often think that many basic things cannot be changed. One good example of this is getting customers to pay faster. We often conclude [...]

An excessive amount of accounts receivables can spell out either trouble or profit for companies. One of the main reasons for the mounting pile of accounts receivables is the fear that customers might conduct their business elsewhere. However, in implementing sound collection policies, the only customers that will be lost are the customers that companies are better off without. Two factors that can alleviate the problem are the prevention of future collection problems and the creation of a detailed, unambiguous credit and collection policy., The chief financial officer must keep an eye on receivables. Receivables are a reservoir of money that could be converted into profit, can be lost forever, or can cost far [...]

The provision of credit terms to foreign buyers offer several advantages. It allows the seller to market products that can be easily purchased by potential customers. It also allows the imposition of higher selling prices which translates to higher profits. Businesses can take advantage of these potential benefits by honing their credit collection skills. These skills are developed by acquiring the proper attitude, being cordial to customers and avoiding ethnocentrism., Compelling Reasons To Offer Credit Terms to Foreign Customers For a moment, consider the reasons you extend credit to domestic clients. Many of those same reasons apply to your foreign [...]

Careful planning and foresight go a long way in minimizing credit risks to financially ailing customers. Although there are various strategies in dealing with such customers, it is important to keep in mind the provisions of Section 547 of the Bankruptcy Code which allows insolvent customers to ask creditors for the return of payments made 90 days prior to a bankruptcy filing. Knowing these will enable credit managers to include preference defense mechanisms into their business relationships., 'No good deed ever goes unpunished.' Any vendor that has continued shipping to a customer in financial distress, and then found itself facing a trustee in bankruptcy, knows the bitter [...]

Do you ever wonder why past due receivables keep creeping up? Are you concerned that the receivables keep aging thus your percent payment performance goals continue to be below target? [...]

A person in charge of collections asked for advice on how to cope with a sales department which does not care whether new accounts are given to slow-paying or problem customers. The policy of paying commissions to salespeople for a sale before collection is the main cause of this problem. However, collections personnel can protect themselves by writing reports which indicate when they recommended that work on a particular account be stopped and the amount by which the account has increased if the recommendation had not been followed., Collections Q&A Q Last month you wrote about the habitual slow-paying customer. Not only do I have to deal with the slow-paying customers, but the problem is compounded by the [...]

One of my Malaysian clients played me a voicemail he received from an American collector. He said, 'Steve, this is how I want my guys to sound.' The American collector [...]

It has long been a controversy in my region of the country, but maybe it's time for a fresh look at using the criminal justice system to recover funds from [...]

This may seem like an off-the-wall question for credit professionals to contemplate. However, given today's economy, it may be relevant to many. Your company, regardless of industry, products produced or [...]

The current economic downturn offers credit managers an opportunity to exercise their influence and implement better credit policies on behalf of their employers. For much of the go-go decade of [...]

It wasn't very long ago that the ATM machine was something only the brave, techno-savvy consumer dared to try. Many of us remember the first time we took the frivolous [...]

Expediting payment from a habitual late-paying but highly valued client can be achieved through extra work and effort on the part of the collector. Payments by large firms are delayed mainly because their accounts payable process requires a lengthy amount of time. Thus, the best way to expedite payment is to work within the client's system to make its accounts payable processes easier and faster., Q How would you recommend a collector correct the habitual slow-paying customer? We have customers that always remit payment, but not within our terms. We value these customers and appreciate [...]

Collecting receivables through telephone conversation requires recognition of the fact that most people intend to settle their accounts despite cases of delayed payments. Files must be thoroughly checked prior to calling customers to inquire about unsettled bills. A positive and undistracted disposition must be established before making any collection calls. Raising concern over possible neglect on the company's part in not receiving payment will help make customers feel more comfortable and avoid putting them on the negative and defensive end.

Big companies have the capability to use sophisticated collection tools and credit professionals for their credit collections but small businesses usually do not have the necessary staff and training to use sophisticated collection techniques. Their only alternative is to resort to methods that they can carry out within their operational setup. Ten techniques in credit collection which can enhance collection results for small businesses are discussed., In big businesses, credit professionals will use many tricks of the trade to help their firms get paid on time. Smaller businesses typically have no full-time credit professionals and are [...]

Companies and individuals could hire the services of credit specialists in recovering unclaimed property that may have been turned over to the state for safekeeping. The state takes over the property after ownership claims have not been filed within the period of five to 10 years. The process of recovery is easy after ownership has been established through thorough research. Regulations for asset recovery may, however, slightly differ among states., It's impressive when everything goes right and a credit professional collects those receivables that have been so carefully recorded among the assets on their balance sheet. However, it's even more [...]

Credit collection involving large claims can be performed more effectively with the help of a lawyer. Creditors can choose to go to a collection agency and allow its lawyers to take action against the client who refuses or cannot pay, or they can hire their own lawyers. The main advantage of using an agency's lawyers is that legal services may cost less, while the main disadvantage is that the agency will be entitled to a percentage of the collected amount. The upside for creditors of getting their own lawyers is that they would only have to paid for the latter's time and costs, while the downside is that the hourly rate arrangement could be costly., In the previous article, we discussed the benefits of using a collection agency for any claims below $10,000. Here, we will deal with larger claims and whether you should use [...]

The benefits of utilizing financial electronic data interchange (EDI) are being reaped by more US companies opting for a competitive advantage over their competitors. The computer-to-computer payment and payment data exchange system is less costly than using paper checks, reduces the risk factors associated with fraud and coordinates the receivables process through automated posting of company collections. Minimization of errors and more accurate cash flows also help improve overall quality., What Is Financial EDI? Financial EDI (FEDI) is the computer-to-computer exchange of payment and payment-related information between companies using a standard format. Financial EDI works much like non-Financial EDI - [...]

Small firms can lessen their accounts receivable problems by planning for effective collection management tactics and programs. Firms are advised not to wait too long before acting on a delayed account and by showing diplomacy and flexibility in asking for payments. Other tactics which may improve collections is for a collector to threaten not to leave a debtor's office until a loan has been paid and to withhold deliveries of supplies until a payment has been made. For the longer term, firms can improve their credit management by increasing the training and education of their credit personnel., Every time a certain body shop owner sits down at his desk, he sees this sign: 'Poor cash management = Failure.' Herb Sager, proprietor of Sager Auto Body Shop in [...]

A value-based strategy is effective in designing or revitalizing a collection system. Both the customer and the company stand to gain benefits if external receivables analysis is focused on every discrete activity that adds more value to the final product or service. Fundamental questions such as who the customer is, what the customer's critical issues are and what the parts of a collection system are crucial in designing a 'value chain' approach collection system., When designing or revitalizing a collection system, focusing a strategy on the value to the customer is the key to success. Centering external receivables analysis on each discrete activity that [...]

Credit managers should act assertively when collecting an account over the telephone. However, they must combine assertiveness with tact, diplomacy to successfully take control and steer the conversation. Several instances of assertive behavior include asking for and dealing only with the accounts payable manager, verifying a negotiated payment plan in writing and confronting breached promises of payment., Credit managers should be assertive. It may be a key to success and advancement. Being more assertive can help credit managers deal more effectively with internal and external problems. Some [...]

Time spent on hard collection work can go to waste once a preference complaint is filed. This action results in the transfer of property from the debtor to the creditor within 90 days before the start of bankruptcy proceedings. Credit managers facing preference complaints can expect late payment of the company's claims and even forced repayment to bankruptcy debtor. Strategies for invoking the 'new value defense' against preference complaints are presented., A preference complaint can reverse the effects of months of vigorous collection efforts. A preference is a transfer of property to a creditor made by a debtor within 90 days [...]

Wouldn't it be great to discover an easy way to reduce DSO? Even better, what if there were techniques available under the direct control of the creditor that can achieve [...]

Has this ever happened to your company? A long-time customer, with whom you have done a ton of business, just missed a huge promised payment. He doesn't have the money [...]

Small companies should focus on credit collection because even small amounts of money have significant impact on operations. Small businesses should not hesitate to have their new customers sign credit applications. This should indicate the credit terms desired. Also, they should be ready to discuss the problem with the customer when the client becomes delinquent. Lastly, small firms must be prepared to sue delinquent clients whenever necessary., In my discussions with many small business owners, I found that they had one thing in common: They were afraid to ask their customers for the money owed them because [...]

Exporters who provide credit terms to foreign buyers can improve the collection of receivables using several techniques. First, exporters should develop partnerships with banks that will be responsible for debt collection. Second, exporters should look out for discrepancies in letters of credit. Lastly, exporters may quote prices in US dollars or in the currency utilized by the buyers., Increase your overseas sales! Dealing with Discrepancies! Get Paid Quicker! We have all been through these seminars - and often walked away confused and bewildered. Exporters who are simply looking [...]

Credit managers have few options when faced with delinquent payments. The collection costs associated with hiring a lawyer are too high and guarantees for recovery are almost nonexistent. A better alternative for claims less than $10,000 is to hire a collection agency. Their service fees are either negotiable or flat which is usually 10% of the amount to be claimed. It would be feasible to check the quality and speed of service utilized by these collection agencies. Only collection agencies with solid reputations must be recruited., Credit managers know that sooner or later they will be faced with the decision of whether they should turn over a delinquent account to a third party. Experienced credit professionals [...]

Creditors can take several measures to avoid bankruptcy preference claims made against them and collect as much money that is due them as possible. A good way for creditors that have already collected partial payments or new collateral to elude such claims is to plan the timing of their debt collection activities. Creditors can also reduce the size and number of claims made against them by immediately perfecting the security interests that they have collected and by building a positive relationship with debtors., It's bad enough when you can't collect all of the money due you. It's even worse when a bankruptcy trustee demands that you return payments already collected on the basis [...]

Many companies are focusing on better credit management techniques to improve cash flow. Consequently, many credit managers are slowly becoming collection managers whose primary function is improving working capital through better credit collection. Several tips on improving collection schemes are presented., When I first started in credit some 35 years ago, the credit department devoted the majority of its time to assessing credit risks. Today, because of computer technology, reduced staff, [...]

Credit managers can gather credit information efficiently if they employ some simple techniques. It is important that personal visits do not jeopardize the business relationship. Credit managers must first make an appointment with the customer before conducting the evaluation. They should also send copies of all relevant documents when anomalies occur. In cases wherein the credit managers has to collect payments, copies of the invoices with the letter must be sent. The customer's credit file must also be reviewed before the credit manager confirms the appointment., The idea of visiting customers is controversial. Personal visits are often time-consuming and expensive, and unfortunately, sometimes considered threatening by customers and the sales department. But, they are vitally important [...]

How important are credit and collection policy procedures--especially in these economic times? If you think we are not in an extended recession and are returning to a highly liquid economy [...]

The age of the 'stereotypical collection call' has come to an end for the successful collector. A standard collection call is merely a demand for payment that would place you [...]

Cash flow management, specifically, credit and accounts receivable management, is tremendously important to the financial well-being and success of most businesses in today's economy. Extension of credit, in one form [...]