The Recovery Report - by Priority Credit Recovery

FOUND MONEY

2016-06-07T16:27:00.004-07:00

I love the Scotiabank’s tagline “You’re Richer than You Think.” If an individual or company takes time to reassess its priorities, expenses, and plans you can always find a way to be more efficient and profitable. Sometime the results can really surprise you.

During the 32 years that I’ve been in the credit and collection industry I have learned that every credit manager or business owner has an “ugly file box” tucked under his/her desk of customer issues that should be dealt with. I have an ugly file box!

Each piece of paper that ends up in this box is either a customer services issue that should be addressed, a finance concern (usually your own), or a business idea that you are saving to investigate when you have some time.

You Are Probably Grimacing Right Now

You know where your “box” is. You are probably grimacing right now just thinking about it. Unfortunately nothing good can come from ignoring your box. Service issues fester, reputations suffer, and opportunities get missed.

As an employer, I appreciate it when my staff wants to discuss the items in their own “ugly file box”. Sure some of the items in the box may feel like they will be harmful to your career; however, in most cases it will only get worse instead of better. If some of these issues are credit and collection related, we recommend having a confidential discussion with the collection service provider of your choice. Your provider is a source of credit and collections expertise. They want you to look good and will provide some ideas and suggestions to deal with the issues at hand.

If your “box” issues are business ideas you've been saving to read later, time should be set aside to review and consider these ideas. As you are reading this article, someone in the world is working on a way to disrupt your business or put you out of business altogether. Time needs to be spent working on your business. Several business groups exist to help you work on your company, like TEC or Vistage International.

Tackle The Box!

Take action now. Tackle the box. Something good always comes out of this process. You will feel better, your business will run more efficiently, and staff morale will increase.

About the Author:

Brad Lohner is a 32 year veteran of the domestic and international credit and collection industry with headquarters in Edmonton and a branch office in Ann Arbor, Michigan.

Cash flow is the lifeblood of Edmonton business. At the PCR Group of Companies, We Protect Your Corporate Heartbeat®. The PCR Group provides expertise in the Order-To-Cash cycle beginning with credit approvals, through to receivable management and finally credit and collections and liens.

Brad Lohner

President & CEO

Direct: +1-780-643-2169

brad.lohner@pcrgroup.ca

http://www.pcrgroup.ca/

How to Hire a Rock Star Receivable Clerk

2016-05-14T11:02:00.002-07:00

It’s no surprise that a majority of business owners and their staff hate having to call a customer for money. Most people end up in that position by fluke or accident. “Mary, you do an outstanding job on our payables. Would you mind calling XYZ customer for me?” the business owner has just placed, what could be their biggest asset, in the hands of someone who is scared to death to pick up the telephone. Is this a good idea? Maybe, but more often than not - no.

Poor cash flow can severely hobble or kill your company, so it becomes critical that if you are going to delegate the job to someone internally, or hire your first receivable clerk, that you find ways to give yourself the best chance for success. Luckily there are many ways to do so. They are:

Post a detailed job description outlining all key performance indicators (KPI’s)
Look for previous receivable collections experience
Run your advertisement in appropriate outlets where receivable clerks are most likely to look such as Indeed or even Kijiji
Check references and call previous employers
Consider the use of a job-specific personality profile

A detailed job description is critical to not only the hiring process, but also the subsequent performance reviews. If the candidate has a clear vision of what you are looking for, they will weed themselves out if they are not suitable, but the right candidate will be thrilled that you have shown an interest in what they do. The successful candidate will feel like an important and valuable part of your team – which they are.

Previous receivable experience is unusually a good indicator that the person can do the job, but is not always the case. Generally the receivables clerk position turns over frequently unless employers take the time to train people. It may be very easy for a candidate to look qualified, when in reality, they have been bouncing from one job to another. As mentioned earlier, this key employee may be managing your largest asset, so it makes good business sense to spend time performing some due diligence. Call previous employers and ask key questions like:

Was the candidate able to troubleshoot and reconcile customer accounts?
Were they able to bounce back easily from rejection?
Did the candidate escalate issues to sales staff or senior finance?

You are checking to see if the candidates really understand their role or if they have managed to fly under the radar at previous jobs and were a mediocre employee.

There are no university degree programs that produce receivable management clerk graduates. The most successful candidates are more “street-smart” than book smart, so placing an ad to hire a receivable clerk on a CPA job board or a high-priced online recruiting agency will likely be a waste of money. We recommend using sites like Indeed or Kijiji that work very well, provided you use a descriptive “headline” and have a link to your firm’s career page. Another option is to connect with a receivable management firm. They may be aware of suitable candidates.

These days checking previous employers and resume references are almost a waste of time. We recommend speaking to a former CFO or Credit manager to get feedback. Ask the tried and true questions – “would you hire the candidate back?” if there is a moment’s hesitation, you should probably dig a little further. Try speaking to someone other than the candidate previous supervisors, sometimes valuable information can be gleaned from an innocent conversation.

Another cost-effective method of picking a rock star receivable clerk is to have short-listed candidates take a credit and collection personality profile questionnaire. These tests have the ability to help you discern candidates with a higher probability of long term job success. If you do not want to maintain a subscription to access these profiles, then you may want to purchase a block of tests from a local credit management firm.

About the author - Brad Lohner is a 32 year veteran of the domestic and international credit and collection industry with headquarters in Edmonton and a branch office in Ann Arbor, Michigan.
Cash flow is the lifeblood of Edmonton business. At the PCR Group of Companies, We Protect Your Corporate Heartbeat®. The PCR Group provides expertise in the Order-To-Cash cycle beginning with credit approvals, through to receivable management and finally credit and collections and liens.

Brad Lohner
President & CEO
Direct: +1-780-643-2169

brad.lohner@pcrgroup.ca

Commercial Collection Agencies in Canada

2016-05-10T14:24:00.000-07:00

Profit from an option you may not have considered.

Commercial debt recovery in Canada is alive and well. Like our U.S. cousins, there are contingency lawyers and collection agencies; however the number of contingency law firms from which to choose, are much fewer than the U.S. market. If your law practice or commercial collection agency regularly receives Canadian claims, it becomes critical that you partner with a supplier that can provide the following:

Reports to all seven Canadian credit bureaus
Provides 24/7 on-line access for instant reports
USD clients trust account to avoid currency exchange problems
Full professional liability insurance
Capable of working in all Canadian provinces & territories
Innovative solutions like Pre-judgement garnishes/Seizures and Mechanics or Construction Liens.
Fully compliant with Canadian Laws

Generally there are two reasons why a company doesn't pay its bills. It’s either a dispute of some nature or it is a cash flow problem. In either circumstance your clients will want you to act quickly; however filing a suit isn't always the answer and doesn't guarantee payment.

More and more American and International law firms, commercial collection agencies, and creditors are submitting claims to Canadian Commercial agencies prior to considering legal action. A collection agency only receives payment if it collects. The agency does not have the ability to earn a fee from the provision of hourly legal services and therefore are highly motivated to liquidate claims quickly for the highest possible amount.

The collection agency will make the determination very quickly if the reason for non-payment is a legitimate dispute or cash flow problem and will obtain all the necessary searches to confirm if legal action will result in a high probability of recovery or turn a bad situation even worse for your client. A professional Canadian collection agency understands your needs for timely and through reporting so you and your client can make sound business decisions. Choosing an agency can be a daunting task. Look for the agencies industry affiliation and certifications. Does the agency owner actively participate in industry conferences? Do they specialize in commercial debt collection? Are they able to supply references in your clients industry and do they understand your clients business?

Unless you are 100% comfortable picking a Canadian commercial debt collection provider, we recommend equally splitting your forwarded accounts to at least two vetted suppliers and let the results and service speak for itself.

About the author: Brad Lohner is a 32 year veteran of the Canadian collection industry. He owns a commercial agency and lien filing firm, each capable of providing service Canada-wide.

For more information look him up on LinkedIn.

The Physiology of Making Collection Calls

2016-02-29T06:08:00.002-08:00

If not done correctly, collecting past due receivables can actually have a negative impact on the human body. According to ScienceDaily.com in a typical work day people sit an average of 5 hours and 41 minutes each day. Researchers indicate that the cumulative impact of sitting all day for years is associated with a range of health problems, from obesity to diabetes to cancer.

Health experts say that sitting is the new smoking.

For example, sitting in an office chair all day can lead to:

· Poor posture

· Poor digestive activity

· Eye strain

· Obesity

· Neck injuries such as herniated discs.

· Bad voice projection, and;

· Poor voice inflection

Top credit analysts and collectors know that communicating with a clear voice that is strong, yet measured - goes a long way to ensure you are heard and exudes confidence in your delivery. Opera, professional singers and stage performers know that voice training as well as proper posture all contribute to successful and clear communication.

There are many ways to give yourself this advantage in your own office:

· When making a collection call, stand up. People in your office are going to notice – so have fun with it.

· Make sure you have a clear goal in mind before you make the call. Never “just wing it”.

· Purchase a stand up desk that you can adjust up or down as required. We have included a picture of a desk that we use called Varidesk.com

· Purchase a longer telephone receiver cord or even better, a Bluetooth enabled headset. If you’re going to stand up during your collection calls, you may as well get your daily steps in too.

As we all get older, obesity can be the number one problem unless you make a conscience effort to have more movement throughout the day. The key to reducing the risk of obesity is consistent, moderate levels of movement throughout the day.

It’s Like Our “Cadbury Secret” – Get the Benefit of Our High-Power Collection Tool

2016-02-02T15:50:00.000-08:00

“Hello? I’d Like to Pay My Account…”

Every business has those customers whose balances are consistently under $1,000.00 per month. When reviewing your accounts receivable, these customers don’t really register on the radar because you likely have bigger balances to keep your eye one. If your business is highly transactional (many unique customers with small balances); then these $1,000.00 balances begin to amount to a lot of money.

So How Do You Manage These Customers For Maximum Profit?

Priority Credit Recovery (PCR) concluded a successful campaign for an international paint manufacturer. The manufacturer has many retail and commercial outlets across Canada and the U.S.A. where commercial painting companies could purchase supplies on an open account. Over the course of time, several thousand customers with smaller balances began to make a dent in the manufacturers’ cash flow. This company needed a way to contact the customer requesting payment, yet preserve the customer relationship without hiring an army of receivable staff.

After careful review of the manufacturers’ requirements, PCR designed a custom contact campaign designed to get the commercial customers to call the manufacturer and speak with their receivable team. The campaigns were unique to each office across the country, taking into consideration time zones, and optimal calling times.

56% of All Small Balance Accounts Paid Within 10 Days!

The custom campaigns resulted in 56% of the customers paying their accounts in full. And a majority of them immediately placed another order. Disputes were solved and miscommunication eliminated. The manufacturer was able to make contact with thousands of customers without adding extra staff or paying fees to temporary staffing companies. And most importantly, the manufacturers customers had no idea PCR was involved.

If your company struggles with the management of low margin past due customers – give us a call today for a confidential consultation. PCR has many tools at our disposal that can assist you without the fear of sending your customer to a collection agency. Priority Credit Recovery Inc. is a member of The PCR Group of Companies where our goal is to be your #1 choice for credit services.

Cash flow is the lifeblood of your business. At PCR, We Protect Your Corporate Heartbeat®

Drilling Dry Holes

2016-01-07T17:37:00.000-08:00

2015 was a very difficult year for many Canadian businesses, especially if you supply to the mining or oil and gas sectors.

For PCR, 2015 saw a record number of CCAA filings with proposals and receiverships.

Unfortunately Canada is still a resource-based economy. All commodities are being hit hard and as of the writing of this article, China's economy is showing signs of major weakness, which impacts everything like exports of raw material as well as imports of manufactured goods. When this happens, Canada's economy will continue to be hit hard.

Be Prepared For a Bumpy 2016

Experienced credit professionals should now be reviewing all customer credit limits as well as looking for extraordinarily large orders from existing customers. If the larger order can't be explained away as seasonal, the customer may be attempting to get as much inventory on hand as possible so when they do go into bankruptcy, there is sufficient "assets" on hand to pay back the bank - leaving you with a massive write-off.

We recommend vigilance when approving credit customers or releasing larger than normal orders. Dust of the Credit Policy manual and ensure all staff are familiar with its contents. A well documented credit policy, when adhered to, can prevent a lot of pain in 2016.

Don't Make a Bad Situation Worse

When reviewing your aged trial balance reports, don't be tempted to wait too long to act on those customers that exhibit any of the 12 Danger Signals. If your first reaction is to call your lawyer to sue, we recommend conducting preliminary due-diligence to ensure that your lawsuit will, in fact, get the receivable paid. Don't sue blindly and turn a bad debt into a larger one with the added costs of legal action. Professional commercial collection agencies have the tools available to conduct a thorough investigation on your behalf. An initial investment of a couple of hundred dollars may save you thousands in the long run by "not drilling a dry hole".

About the author: Brad Lohner is President & CEO of the PCR Group of Companies, which consists of a Canadian and an American commercial debt recovery firm, a lien filing service, as well as a credit consulting division.

Compliance Today = Still in Business Tomorrow

2015-11-24T17:24:00.002-08:00

The world is becoming an interesting place. Failed diplomacy and rising terrorist activity are but a few of the commonplace headlines around the world. "That kind of thing can’t happen in my back yard…that happens over there”, is a common thought amongst most North American business owners.

Why is a Commercial Collection Agency Writing about This?

In our opinion, commercial debt recovery firms are ripe for money laundering activity. A “client” places a large commercial claim against another entity. The “debtor” company then pays the amount owed and your “client” wants a wire transfer, of the funds collected, to an account outside of North America. If the commercial collection agency does any amount of international work, this kind of transaction occurs frequently.

The fact is that if a firm transfers funds from one individual or organization to another using an electronic funds transfer network or any other method such as bitcoin, hawala, hundi, fei ch'ien, and chit, can be target candidates for money laundering or even terrorist related activities.

What is Priority Credit Recovery Doing to Combat Suspicious Activity?

Priority Credit Recovery Inc. (PCR) is a national commercial debt collection agency in Canada. PCR has recently adopted certain compliance regimes to help identify and report suspicious financial activity. PCR is in the process of becoming FINTRAC compliant. PCR is in the money service business; therefore we must develop comprehensive customer on-boarding procedures to ensure compliance.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada's financial intelligence unit. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.

PCR will collect data from the prospective foreign customer such as full name, full name of company, date of birth, copy of incorporation certificate, copy of passport, and similar other identification. If the proposed transaction meets the criteria to be considered suspicious; then we must report the activity to FINTRAC.

Recently PCR implemented the CSAE 3415 Type II Audit. It is a report on Management’s description of the system and the suitability of the design and operating effectiveness of our business controls as it relates to our clients sensitive data and financial transactions.

Compliance with CSAE 3416 and FINTRAC ensures that PCR is managed correctly and that checks and controls are in place to ensure the company remains strong. PCR controls millions of clients’ trust funds every year. The audit trail and controls ensure that clients’ trust funds, and their customers’ personal data, remain secure.

Credit, Social Media & Your Customer

2015-11-05T15:10:00.000-08:00

In today's networked world there are tremendous technologies that credit and collection professionals can use to their advantage. If you don’t know how to Tweet, Link, Connect, Like, Share, Comment or Post; you will get left behind.

Credit Managers, Business owners, and receivable staff should be encouraged to have a profile on LinkedIn at the very least. Care should be taken to use specific keywords when creating your personal or company profile. Let the world know what you are good at. Ask your customers and suppliers for references. Most importantly send your customers and prospects a Connection Request. If accepted, you can learn a lot more about your customer and them about you.

Why is Social Media Important in Credit?

In our popular article entitled “The 12 Danger Signs”, we outline several scenarios where a LinkedIn connection to your customer would prove invaluable. Would it be useful to know if several of your customer’s key management personnel left the company?

What if your prospective customer gives you a credit application and states they have been in business for 10 years, yet the company profile (and that of its owner) is either sparse or non-existent? Should you be worried or at least pause a little bit?

If your customer’s business is operating as a going concern, you should see some social media activity, some on-line advertising, an updated webpage, perhaps an on-line store or even a Kijiji advertisement. All of this activity should give you some level of comfort that your customer or prospect is trying to build their business. Conversely if you do a Google search and only find a website with your customer’s equipment for sale – then that would be a major cause for concern.

At The PCR Group of Companies we try hard to post relevant content to our followers that may be of interest depending on the subject of the article. For examples of active social media accounts – just click on the links below to see what we are doing:

· https://www.linkedin.com/company/priority-credit-recovery-inc.

· https://www.facebook.com/prioritycredit/

· https://www.facebook.com/lienfiler

· https://twitter.com/prioritycredit

What’s The Bottom Line?

Prior to extending credit or entering into a contract, we strongly encourage you to examine the social media of person or company with whom you are contemplating doing business. You can tell a lot about your prospective customer by checking their on-line profiles in LinkedIn, Twitter, Facebook, Instagram and Pintrest - just to name a few.

Perform an internet search on your customers email address and cell number. You may be shocked/ pleased at what you find. Do your due diligence on a prospective customer well in advance of processing the first order.

PRE-CONSTRUCTION CREDIT REPORTS

2015-10-26T15:17:00.003-07:00

Minimize Surprises With Your Cash Flow

Back in the 70’s and early 80’s a Builder or Construction Lien all but guaranteed that you would get blackballed in the local market. Today’s construction market conditions are quite different. Developers and Project Managers are taking all necessary precautions to protect themselves from risk and so should you. In fact, many suppliers and sub-trades are embedding language in their credit applications and customer contracts that specifically state that a lien will be filed in the event of delinquency.

LIENS ARE BECOMING STANDARD OPERATING PROCEDURE

Make no mistake – liens are a collection tool, not a credit granting tool. Upfront due diligence of the proposed project is the best way to decide if a potential bid is within your tolerance for risk. Liens only help once your cash flow is already in trouble whereas a Construction Credit Report may provide some advanced warning of how a Developer, Engineering firm, or General Contractor typically manages its sub-trades and pays its bills.

A Construction Credit Report should provide you with the following data:

Construction Credit Reports providing credit ratings, in-depth analysis, supplier payment trends, legal and business data
Freshly investigated bank & trade ratings with historical references for comparative analysis
Legal Name Verification and Business registration details on all reports
Principals & Directors verified & linked to related businesses
Affiliated companies reported

SOMETIMES THE BEST DEAL IS NO DEAL

Before you formalize your bid on a project, we recommend contacting our office to obtain a full Construction Credit Report which contains lien data for Alberta, Saskatchewan, Manitoba, Ontario and Quebec, as well as project credit reports, bank reports and business ownership cross-matching.

Many Lien-Pro® customers have commented that the cost to obtain a Construction Credit Report was “cheap insurance” when compared to entering into a contract with a high credit risk customer.

International Forwarding

2015-10-16T10:55:00.002-07:00

International forwarding or legal forwarding are the terms used by collection agency insiders when they must retain the services of an attorney in a foreign jurisdiction if the agency is unable to collect on their own.

Generally the practice of most collection firms throughout the United States, and for that matter, the rest of the world, is to automatically sue a foreign past due customer using an attorney in the debtor country. This is a long-established practice that has been satisfactory to creditors for many years. Unfortunately the original collection agency doesn’t have the ability to thoroughly research the debtor to ascertain the probability of recovery and ironically neither does the receiving attorney. Many times the creditor is suing blindly and incurring an even bigger loss due to suit filing fees and attorney fees.

Is Suing Blindly a Good Idea?

Rather than allowing your collection agency to follow the old established methods, we recommend a different approach. In today’s market, the creditor can ask that the past due customer be sent to a specific attorney or third-party debt collection agency in-country. The benefits to contracting with a collection agency in the debtors country is that, unlike most lawyers, they report your claims to the local credit bureaus.

Many times the account gets paid due to bureau reporting because you have “brought the fight” to their doorstep and have negatively affected their credit. An equally important benefit to contracting with a foreign collection agency is that they work on a contingency basis too. The agency will provide you with a very conservative estimate of recovery if legal action is required. They only get paid on recovery whereas a foreign attorney will be sending invoices for each step they may take.

So What Should a Creditor Do?

Just as in any industry there are good operators and bad ones – and collection agencies are no exception. We recommend using a collection firm, in your customer’s country that is an active member of ACA International or other professional associations such as The International Association of Commercial Collectors or the League of International Creditors. These professional associations vet their members very carefully, looking for proof of compliance, proper insurance and client trust bond coverage.

Don’t make a bad debt even worse by suing blindly. Be sure to ask your foreign attorney or agency to conduct a full pre-legal investigation first. This step is significantly less expensive than traditional alternatives.

Balanced Score Card Management

2015-10-02T15:36:00.000-07:00

According to Wikipedia, the Balanced Scorecard is a strategy performance management tool – a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

The origins of a Balanced Scorecard run deep and have been called various names such as “dashboard” and “performance management” or “corporate scorecard”.

The commercial debt collection business is, in some ways, the ultimate production and results-based environment. Compensation is solely based upon performance – No-Collection No Fee. Many factors and business processes must come together to result in the recovery of money. In more cases than not, the collection agency can do all the right steps, and the recovery may not happen. The best outcome in these situations is a timely report as to why the account should be sued or written off.

At Priority Credit Recovery (PCR), we look at the top 20 action items (like KFC's eleven herbs and spices) that MUST be completed if a client’s receivable is considered fully worked. Our operations, sales, and finance teams are all scored according to the vital components of their work. Weekly meetings are held to review our individual and team results. Each team lead must present their results and discuss. Issues that may be identified during team presentations are discussed in management strategy sessions and plans are made to address those issues.

At PCR, we have borrowed a phrase from Gino Wickman’s book “TRACTION”. The phrase is “everyone has a number”. If you have developed your scorecard correctly, objective data (numbers) can be allocated to each business process. We have found this process to be very illuminating at times. Once you shine a light on something – it gets fixed quickly.

Our firm highly recommends that a process similar to this be implemented in your business. Each business unit - Sales, Credit, Warehouse, Procurement, and Human Resources as well as Information Technology, can provide the executive management team and business unit leaders with the critical data they need to run the business.

If you would like help to set up, implement, or manage the ongoing scorecard process, give PCR a call. Our executive team can provide the consulting necessary to get your business running at peak efficiency. Our number is 1-866-266-0117. Dial extension 350 for assistance.

League International for Creditors – LIC International

2015-09-22T16:40:00.000-07:00

LIC is a world-wide association of 3700 professional collectors, lawyers and credit bureaus. A number of these firms are confidential partners of consulates and embassies.

Membership into LIC isn’t guaranteed by submitting an application and fee like most professional associations, potential members must be invited by an existing member, submit proof of financial stability, and demonstrate compliance within its marketplace. Some of the benefits of membership include:

• Worldwide professional network of debt collectors, covering more than 70 countries. The members have long, solid experiences within debt collection.
• LIC provides expertise in the legal systems, rules of enforcement, customs and practices in our member countries, eliminating risk and creating a level playing field upon which to trade
• Offering both Business to Business (B2B) and Business to Consumer/Individuals (B2C)
• LIC members are experts in the language and cultures of their respective countries
• LIC members can help you find acceptable solutions, even in disputed files and offer you full cost control. Never start any legal action without permission from the principal beforehand
• Offering fixed / discounted prices – You do not need to spend time and effort to negotiate prices
• League International for Creditors was founded for more than 50 years ago and all members are approved by the LIC Board. To be a member you need good references and a healthy economy
• We try to get the costs paid by debtor and claim interest from due date until the debt is paid in accordance with local laws and regulations
• Other services many of the LIC members offer:
o Legal and extra judicial assistance – access to extensive resources
o Visiting debtors, Call center, Credit information, Asset search, Address search, etc.

LIC members assist each other with $7 Billion in bad debts from over 150,000 exporters annually. Every second year members gather together for a General Assembly to exchange ideas and best practices as well as learn of updates from all jurisdictions as well as make or renew acquaintances.

Priority Credit Recovery (http://www.lic-international.com/canada/) is an active member of the League International for Creditors and is capable of administering your international debt collections almost anywhere in the world.

Recovering Collections Fees in Canada

2014-09-08T09:09:00.002-07:00

To be able to recover your collection costs from a commercial debtor in Canada, you must have a valid signed agreement whereby the debtor has agreed specifically that the costs of collection are recoverable.

A version of this clause may look something like this:

“The customer shall pay all solicitor's fees and expenses, and all legal costs as between solicitor and his own client on a full indemnity basis, as well as an allowance for the time, work and expenses of the Credit Grantor, or of any agent, solicitor or employee of the Credit Grantor, for any purpose herein provided for and whether such sums are advanced or incurred with the knowledge, consent, concurrence or acquiescence of the Customer or otherwise, together with interest thereon at the rate provided for herein, shall be repayable to the Credit Grantor on demand, or if not demanded then with the next ensuing installment payable to the Credit Grantor.”

Where these costs are recoverable, often the courts decline to add the total amount of the collection costs and/or contingent fees in the event you decide to sue your customer.

Funds paid for court filing fees, service of documents, etc. are legally recoverable in all provinces in Canada and are added to the final judgment amount.

The Reality of Recovering Collection Costs

Notwithstanding the legalities, what are the chances of recovering collection costs from your slow-paying customer?

As with any business transaction, if you have a signed agreement where the customer has agreed to your terms and conditions, the chances are more favourable than if you do not. Sometimes it may take court action to facilitate the recovery of collection fees. It is only possible to enforce a legal contract through the courts.

Priority Credit’s approach is to recover all principal and interest charges on an amicable basis. If the creditors agreement with its customer contains the required clauses to hold the debtor company liable for collection fees, then we will work to obtain those expenses as well.

Should your customer balk at paying these fees, they may be used as a negotiating tool to encourage prompt remittance of the principal amount of the debt.

When pressed, some debtors will agree to pay the interest expense, especially if they want to work with the creditor again in the future; however if there is no signed agreement to pay interest or collection expenses, the debtor will not pay them.

How to Hire Top Shelf Credit Staff

2014-09-04T17:42:00.002-07:00

In most small and medium sized companies the accounts receivable clerk was recruited from the accounting department and got the job by accident. If you were to ask these credit clerks if they actually enjoy their work – most will answer with a resounding NO! Employee turnover in this position is extremely high.

Low Job Engagement = Big Problems

If you check out the help wanted ads they are chock-full of employers looking for credit and collection personnel. We regularly see advertisements for the same companies every month. Turnover in any employee position is expensive; however the turnover of credit and collection staff can be exponentially more expensive if not caught and corrected right away.

Untrained Staff Managing Your Largest Asset?

So how do you attract and retain quality credit & collection staff? It all starts with your advertisement. Workopolis, Monster and Career-Builder are popular help wanted sites. Firms like Robert Half and Mercer Bradley can help you with recruiting as well. Increasingly sites like Craigslist and Kijiji have become excellent sites to post your advertisements.

Your advertisement is critical. Be specific about the job expectations. Post the salary or the hourly wage. Let people know exactly what they can expect. Pre-qualify candidates to make sure they possess the qualities of top credit and collection professionals. There are several pre-employment tests that can be administered to help you short-list candidates for this specific position.

Ounce of Prevention vs. Pound of Cure

Once you have posted your advertisement, pre-qualified your candidates, and given thoughtful consideration to the job requirements – you are ready to make an employment offer. Attracting and retaining the right credit and collection personnel is critical to your firm’s financial success. Don’t leave it to chance otherwise you can expect the same results with your accounts receivables.

Need Help? No Time?

If you know you need help with your accounts receivable, we can help you draft an advertisement, test candidates and provide you with a short-list of people that actually want to work in credit and collections.

Call us today at 1-866-266-0117 for a free consultation and don’t leave your financial results to chance.

Putting the “Management” Back Into Accounts Receivable Management.

2014-07-30T09:31:00.002-07:00

A number of factors handicap credit managers from being able to increase their employers return on investment of the extension of credit to its customers. In many cases budget controls, designed to increase margins, actually prevent credit managers from implementing corrective solutions.

There are four significant roadblocks that most organizations cannot navigate in a cost effective manner.

They are:

1) Inadequate Reporting Capabilities: Most accounts receivables management professionals cannot generate an accurate, meaningful report, which makes it almost impossible to evaluate a company’s receivable portfolio. This inability to generate accurate reports may reduce the company’s ability to be seen as transparent and accountable. Poor reporting also hinders a credit manager’s ability to identify and correct process inefficiencies.

2) Ineffective Processes: In many companies, accounts receivable management functions are carried out at a branch level, which creates an issue when attempting to get consistent results. Even when the A/R function is centralized in a head office, poorly documented processes create and perpetuate ongoing problems. This lack of a well-defined process results in: increased DSO, decreased value of cash collection, increased customer service complaints, higher write-offs and interest expense; increased staffing costs, and; increased cost of collections.

3) Poor Software Systems: old legacy software and even state-of-art ERP (Enterprise Resource Planning) software does not provide the functionality that credit and collection staffs need to properly manage the receivable asset. In most instances credit managers must work with multiple non-connected systems, further reducing productivity and staff morale.

4) Inflexible Staffing: Staffing levels that are not in sync with demand are a significant drain on profitability. Wages and benefits are fixed costs and when full-time staffing exceeds a company’s immediate demand, many dollars are wasted. Conversely, if demand exceeds your staff count, companies suffer significant production inefficiencies. Circumstances such as seasonal demand, competitive staffing environments, merger, acquisitions and high growth situations can all cause accounts receivable to suffer.

The use of temporary staffing options actually exacerbates the burden on credit managers who must train and then supervise transient help.

Accounts Receivable Management Outsourcing Can Increase Profitability

Faced with an ever-increasing workload, and combined with the four issues mentioned earlier, partnering with a firm that specializes in accounts receivable management provides the most effective method to attain sustained improvement.

By providing a consistent, efficient and technologically current system, outsourcing A/R collections offers opportunities to alleviate the many challenges credit managers and CFO’s face.

How are these efficiencies achieved? The answer lies in a basic understanding of the receivable recovery process. A highly efficient receivable management process staffed with trained professionals, brings cash in quickly, improves cash flow and working capital. Outsourcing the collection process further enhances profitability by decreasing processes and administrative costs, staffing FTE, DSO, and cost per transaction.

We Don’t Want To Lose Control of Our Customer

As the “face” to the company’s customers, an effective collection process has the potential to heighten customer service, which maintains customer loyalty and increasing sales. The work is conducted using your company name. All service related issues are uncovered quickly and your sales staff can be engaged faster to fix problems.

Receivable Collection Outsourcing Improves Performance.

Outsourcing the A/R function solves the four major productivity issues mentioned earlier.

1) Gain leverage through access to specialized collection management software. With collections as its core competency, an A/R outsourcing firm can afford to implement and maintain industry leading software designed especially for A/R collections. The company that hires an A/R outsourcing firm gains access to these systems and processes without the capital expense, not to mention the added cost of maintenance, training, and upgrades. The Credit manager has increased control through access to better systems and centralized access to company-wide data.

2) Consistent, effective collection processes. A/R outsource providers have access to automated work flows, customized letter campaigns, scheduling options, and recording capabilities. An outsourced A/P process provides the creditor with a standardized, consistent and disciplined process to the collection process. The benefits of standardized treatment of accounts receivable is improved quality, increased customer satisfaction, faster collections, and increased rate of cash flow.

3) Cost Effective & Flexible Staffing. Another benefit of outsourcing accounts receivable collections is that of scalable staffing. All costs associated with human resources; including advertising, training, wages, benefits, and ongoing professional development and career planning becomes the responsibility of the provider. A creditor can “add” or “delete” staff as required. CFO’s appreciate being able to switch staffing from a fixed cost to a variable cost.

A major point of difference between an outsourcing provider and a temporary staffing agency is that relying on temporary staff when managing an A/R portfolio is largely ineffective. Temp firms are great at placing headcount but simply cannot provide the expertise and ongoing management that is required for temp staff to have an immediate positive impact in your business. Also, internal processes and culture may be disrupted using temporary staff as they do not have the time nor inclination to integrate seamlessly like an outsource vendor.

For more information or a confidential free consultation, please call us at 1-866-266-0117 ext 350 today.

Power Negotiating For Profit

2014-06-06T15:09:00.001-07:00

After almost 30 years as a professional negotiator you would think you would have been there- done that and had the t-shirt to prove it - click here to see how old dogs can learn new tricks.

As many of you may have figured out, I am a TEC/Vistage member which is a group of CEO’s that get together once a month and act as each other’s advisory board. This month’s guest speaker was Bob Gibson of San Francisco- based [Negotiation Resources] (www.thenegotiating experts.com) Bob’s presentation centered on training our sales staff to not leave money on the table whether it is with new or existing customers.

The presentation covered the standard negotiating gambits like “The Flinch” and “The Squeeze” but also presented a different perspective on “The Nibble”. To refresh your memories- the Nibble happens when you think the sale is done and then the customer asks for a little more- a full tank of gas with the new car- an earlier delivery date- Can you throw in a tie with that new suit?

The usual counter tactic to “The Nibble” is to make the buyer feel cheap for asking by saying something like: “Come on Jack, you have negotiated yourself a heck of a deal here and now you want more!?”

This counter tactic will likely stop the Nibbling; however it runs the huge risk of alienating the customer so they won’t buy from you again. In fact most sales people will not use this tactic because they don’t feel like the buyers equal in the negotiation so they give in- and give away your profits!

Gibson suggests the best way to stop being nibbled is to use what he calls the “Swap-Out”. A Swap –out means just what is says. When you get Nibbled, swap it for something you want instead of just giving away.

The Swap-out response to the Nibble may look something like this: “That might be possible. If I can get that done for you, what are the chances of you ……?”

Gibson recommends having at least 6 Swap–out ideas in your mind before going into any negotiation. The Swap – out keeps the conversation going and doesn’t risk offending the other party. The types of Swap-outs are only limited by your imagination. Mastering the Swap-Out will put your sales staff on the same level as your customer or prospect and make you more profitable.

Collecting Foreign Receivables

2014-05-22T13:55:00.001-07:00

Expanding your business into foreign markets is exciting, gut wrenching, heartbreaking, and exhilarating. Sometimes all at the same time.

When selling into foreign markets, most Canadian businesses do not ship goods until the purchaser has provided a Letter of Credit. Another option to ensure payment is trade credit insurance. Trade credit insurance pays you for your receivable in the event your foreign customer fails to remit. Some trade credit insurers include:

AON
Atradias
EDC
Euler Hermes
Coface
AIG

At Priority Credit, we work with clients who have foreign receivables not covered by insurance. And we work for the insurance companies themselves.

Recently a client from Montreal retained our services to collect a receivable from a customer based in Portugal. After several attempts through our Portuguese- speaking collectors, it became obvious that the Portuguese debtor was not willing to negotiate in good faith.

Through our active involvement with the International Association of Commercial Collectors (IACC), our firm was able to transfer our client’s receivable to a trusted IACC business partner in Portugal. Our Portuguese agent was able to “bring the fight” to the foreign customers doorstep and successfully negotiated a repayment schedule which recently resulted in the account being paid.

Our agent wire transferred EURO to our trust account and Priority Credit converted the payment to Canadian dollars and remitted to our client.

If your firm has slow-paying international accounts receivables and you are not sure what to do, we recommend retaining an IACC member agency. IACC member agencies are carefully vetted for their strict compliance to local laws and bonding requirements. In addition to IACC membership, we further recommend retaining an agency that employs IACC Certified Collectors.

Agency employees that maintain their professional designation are very serious about their careers- and your money.

Cash Flow is King

2014-05-11T09:03:00.002-07:00

The number one mandate of any business is to survive. This mandate supersedes any other. An organization must generate enough cash flow to meet its obligation such as payroll, taxes, and payment to trade suppliers and avoid being insolvent.

During negotiations with many debtor companies, the #1 response we typically hear is “We had tons of orders- I don’t understand why I’m in trouble”. These “successful” business people become insolvent because they simply didn't have enough cash to meet operating expenses, including the added cash requirement that increased sales generates. Without adequate cash planning these debtor companies were not capable of meeting payroll and the purchase of raw materials to meet the sales demand.

With any business the cash cycle looks like this:

Cash is used to buy raw materials or pay for services rendered in the production of the final product or service. The sale of the goods or services produces cash and accounts receivables. When customers pay their bills, the accounts receivable goes down and the bank balance increases. Unfortunately the cash doesn't usually come in the same month as the sales generates.

If a business finds itself short of cash, the options are:

The owner can inject more cash into the business.
The business can use a pre-existing bank line of credit.
The business can slow its payments to trade suppliers.
Sale of fixed assets.
Sale of non-current inventory.
Issuance of company stock.

One of the easiest methods of raising some fast cash flow is to ensure you are collecting money from your credit customers in a timely matter. Your collection efforts should include a systematic and consistent follow-up. This is vital to the establishment in the credibility of your credit terms in the minds of your customers. Time is of the essence when credit and collections are concerned. To be effective one must follow-up diligently. An accurate, timely report of your aged trial balances is crucial to the efficient control of collections and release of new orders.

Putting a customer’s order on credit hold is an excellent way to get their attention. Prompt contact with your customer in a professional, tactful manner usually produces the desired effect. Make sure you respond quickly when your customer pays his account to make sure there are no delays with their next order.

Trust – But Verify

2014-04-04T09:29:00.005-07:00

The Value of Validating Your Customer & Supply Chain

The phrase “Trust-But Verify” comes from an old Russian proverb. Ironically in the 1980’s it was a favorite mantra of Ronald Reagan. Wikipedia defines it as: a form of advice given which recommends that, while a source of information might be considered reliable, one should perform additional research to verify that such information is accurate, or trustworthy.

Back when I was a kid and just got into the receivable management business, I had a boss that used this phrase all the time – and it drove me nuts! Today we have staff in two countries and thousands of clients and can now tell you unequivocally that he was right. Trust your customer but don’t be naïve. Trust the information on the new credit application but complete your due diligence check list anyways.

It’s All About Risk Management

Trusting your customer and vendors is important in business. Validating that your customer and vendors are capable of fulfilling their obligations is of equal importance – maybe even more so.

So How Do I Trust But Verify?

There are many ways to satisfy yourself that your client and vendors are capable of doing good consistent business with you. If possible, we recommend visiting your customer or vendors place of business where practical. Have a look around. Is the yard busy? Does the stock on the shelves look current? What’s happening at their loading dock? Do the employees look busy? Are the phones ringing?

All these indications are good signs of the level of activity that your client or vendor is operating as a going concern.

What If You Can’t Visit?

If the physical location of your client or vendor makes it impractical to do a premise visit, we recommend retaining the services of a credit investigation firm that maintains the ability to obtain information not readily available. They should have access to corporate records, land titles or deed information. They should have access to construction project data. Additionally they ought to maintain the capability of performing reference checks on trade suppliers and obtaining a bank check. It should be simple to use an investigation firm. Look for a vendor that provides online access and is equally easy to call on the phone.

Surprises are for Birthday Parties – Not Your Business

In negotiations, information is power. Access to reliable current data on your customer and supply chain will help you to plan and source alternate suppliers if appropriate. Don’t get caught with no place to sit when the music stops.

About the author: Brad Lohner is a Director of the PCR Group of Companies which owns Priority Credit Recovery, a Canadian commercial collection agency and AccountAdjustment Bureau, Inc., an American commercial agency. The PCR Group also consists of Lien-Pro – Canada’s only Construction and Builders lien filing firm, and Credit Process Advisors – a strategic credit management and accounts receivable outsourcing firm. Priority Credit Recovery and Account Adjustment Bureau are authorized agents of Lumbermen’s Credit Group, a construction and mercantile credit bureau with access to data throughout North America.

Staying Out of The Doghouse

2014-03-08T05:45:00.000-08:00

In the receivable management world, we see the good, bad and ugly of both business and human relations. While we have touched on this topic before. we believe it is a good time for another review. Let's review the secret to good business.

When I was a kid, my dad had a saying whenever I got into trouble. He would say “What are you in the doghouse for this time?” As we work through our clients disputed receivables and consult with prospective clients, my dad’s question still rings in my head. Approximately 40% of the cases assigned to our firm in the last 24 months have not been a result of the customers inability to pay, but rather a dispute with delivery, quality, supply chain disruption, unfulfilled promises...and the list goes on. In these situations our firm acts more as a mediator than professional debt collector.

There is a way for creditors and their customer to stay “stay out of the doghouse” and that is to not be afraid of tough conversations. Addressing tough issues head on without your pride or ego getting in the way is difficult. For some, admitting mistakes is tough. Creating an environment where staff and customers can fess up to mistakes can be equally challenging. Trusting your boss to not crucify you for making a mistake can be tough.

So What Do You Do?

A young Jewish man was once quoted by his friend John as saying “… the truth shall make you free.” As was true over 2000 years ago – the same is true today. Phone your supplier or customer and admit you screwed up. While the recipient may not like the message initially, they will come to respect you for admitting the mistake.

Taking this approach will accomplish two things:

1) Position yourself as a person or company of integrity, and/or;

2) Establishing yourself as someone who can be trusted during a difficult negotiation.

Managing Expectations

The best way to position yourself as a person or company of integrity is to talk about the “tough stuff” up front. As mentioned earlier, if everyone did this, 40% less receivables would end up in third-party collections and business relations may be stronger than ever! The best way to minimize these troubles is to do your due diligence on your vendor supply chain and customers at least once each year. Check their credit rating, review their warranty claims, review their track records.

If you need assistance with the due diligence process contact our business partner Credit Process Advisors Inc. to obtain information such as credit information, bank checks, builder lien information, law suits, and receivable monitoring.

What does a Credit Manager look for in a Collections Agency?

2014-02-16T16:51:00.000-08:00

Credit Managers are looking for an agency that will get their invoices paid as quickly as possible for as little expense as possible. Aside from that they might be looking for the following:

1. Professional service – the Agency is still acting as an agent of the company

2. The Agent is compliant with all the applicable laws and all legislative acts so as to not put the company in a precarious position of liability

3. The Agent is licensed, bonded and insured

4. The Agent has staff with industry specific collection experience – A Credit Manager would be much more comfortable that an account is dealt with properly knowing there is prior knowledge of the industry

5. The Credit Manager needs to know how the Agency instructs their staff regarding collections – are they aggressive; do they only make 1 call a week and move on with or without an answer; do they only send demand letters and quit after there is no contact; do they play the “numbers game” or do they provide more of a service to their customer; do they treat a small account with the same effort as a large account

6. The Agent has proper geographic coverage the company requires

7. The fee is competitive as uncomplicated as possible – a sliding scale can be confusing and all a Credit Manager wants to know is, what the cost is at the end of the day, for submitting the file. A Credit Manager would also want the ability to negotiate a “Special” fee for unusually large accounts that may be submitted

8. Agent invoices and/or issues customer payments to the company on a regular basis. The Credit Manager usually must code the collection costs back to the original Cost of Goods Sold (the original G/L) to where the original charge came from so it’s important to understand how the invoicing needs to be done. The longer the Agency holds a customer’s payment, the longer the Credit Manger is without their money

9. Ease of retrieving information on an account submitted for collections – how can they review the accounts submitted to the Agent. What is optimal to some Credit Managers is to be able to review the work done online – they may also be able to enter new information they have received and need to give to the collector assigned. It is difficult to work via phone sometimes due to time constraints and being on the phone – it can often be days before you can connect to each other and it might be too late dependant on the information

10. How and when the Agency determines when to recommend placing and account with a Collection Agency – it is important to retain a Collection Agency that has the same mind set as you do. An experienced Credit Manager will want to retain an Agent that will do the best thing for their customers and not for themselves. The Credit Manager will want to be assured that the Agency is acting in their best interests and that includes the issuance of accounts

11. How and when the Agency determines when to recommend placing an account into Legal status. An Agent should not waste time and effort on collections when they know from researching the company there is no chance of payment forthcoming. The Agent should identify this issue with the Creditor as soon as possible for the Creditor to make the decision of Legal or Write off

12. Every Credit Manager might want something tailored to them when issuing an account. Every Credit Manager will say they are busy BUT they still need to report to their superiors what is happening on an account. It is sufficient at the initial placement of an account to the Agency, to indicate to their superiors that an account is “Placed for Collections” but after a while, a review needs to be done to decide whether the account is collectible or if the account is to be written off and a decision made regarding how any future recovery would be recorded. The Company Policy should define this but it may not. It is important for the Collections Agency to be upfront and timely with their findings regarding the account submitted for collections

a. What is the likely hood of getting any payment if not the payment in full including any historical collections/legal’s and their outcomes

b. If an account is uncollectible by Collection means, offer another possible avenue to collect the funds (Civil Claims or Court of Queen’s Bench) and the potential cost to your customer if they decide to go that route. It can be the case that a Collections Agent has a legal person on staff/retainer to do Civil Claims which is less costly than the Company would pay having to hire their own lawyer.

c. Decide how long the Agency keeps the account active and what happens if they close the account

i. If an account is closed with the Agency, what shows on the customer’s credit bureau and how does that affect them

d. How does the customer want to handle potential disputes the Agency uncovers

13. Does the Agency belong to any Credit Associations? Some Credit Managers may find this important and others may not be interested. An affiliation with a Credit or any other Association indicates the Agent is either becoming or is well established in the community where they are located. This can make a Credit Manager comfortable in knowing the Agent has some longevity and investment in the community and their actual existence

14. Does the Agency have any references? A Credit Manager is more apt to retain an Agency’s services if their industry peers have had success with them.

It is important to remember that a Credit Manager uses outside sources to make their lives easier, not more difficult. They don’t want to have to work out a calculation at the beginning or the end of the issuance of a file to the Agent.

Selecting a Professional Collection Agency

2014-02-16T16:47:00.000-08:00

Choosing a professional collection service to manage your delinquent accounts and other related tasks is a wise decision, but where do you start? You want an agency that will represent your organization in a responsible and professional manner, and one that provides a satisfactory rate of recovery while maintaining your public image. The decision involves more than just giving your business to the lowest bidder – it requires careful consideration.

Getting the most from your collection agency requires cooperation and strong communication. The following are some key issues that can help businesses determine the quality of an agency and help increase your success in the future.

Capabilities

What can the agency do for you? Collection agencies use experience and resources to provide professional accounts receivable management services for numerous industries.

Agencies can offer skip tracing services to locate consumers when they can no longer be reached at the address or telephone numbers listed on the accounts.

Many also have the ability to forward accounts to other agencies if a consumer has relocated. You should consider the types of technology the agencies are using and how your technology might interface to allow for the electronic transfer of data and information. In addition, some agencies provide billing services, including coding, processing, printing and mailing, while others offer business administration and accounting services. Sometimes an agency provides pre-collect services, where collectors start working an account before it becomes past due. Other service agencies provide consulting, telemarketing, campaign calling, reminder and follow-up appointment calls and temporary office administration.

Market Knowledge

Make sure the agency has the skills and knowledge needed to successfully collect on your particular type of account. For example, collectors working in commercial collections must be familiar with corporate terminology and indemnities, while collectors working consumer debt collections need to demonstrate knowledge of the regulatory framework devised by the various provinces, the lender/guarantor relationship and bankruptcy rules related to the collection of consumer debt. It’s important for agencies and credit managers to be aware that each collection market needs to be handled differently.

Recovery

Discuss recovery percentages and rates. The percentage rate of commission may be less important than the agency’s percentage of return on the total dollars you refer for collection. For example, if you turn over $1,000 worth of accounts at a 25% commission rate and the collector recovers only $300, you will receive $225 from these “bad debts.” If you refer $1,000 at a 35% commission rate, but the collector recovers $500, you will receive $325. Even though the commission rate is higher, your profit would be greater in the second example because the agency’s recovery rate is higher. Remember that the commission rate by itself is meaningless – net return is the key.

Procedures and Policies

Investigate the procedures an agency uses to collect, including when it begins working an account, the collection letters it uses and whether it has trained employees. Become familiar with the agency’s policies and standards. A visit to the collection office can be helpful and allows you to observe the operation of the business. Compliance with the Fair Trading Act (FTA) and other provincial legislation, regulating the collection industry, is critical to third-party debt collection agencies. Inquire about the policies and practices the agency has in place to facilitate compliance.

References

Another step in selecting a reputable agency is checking references. Try to contact at least two creditors in your industry currently using the agency’s services. Find out if the arrangement is successful and how satisfied clients have been with the services they've received. Also, try to determine if the agency has a good reputation in the community by contacting other credit grantors, the

Better Business Bureau or local Chamber of Commerce.

Professional Credentials

Make sure the agency complies with all provincial licensing and bonding laws, if applicable. Experience is often a good indication of quality. Also, determine if the agency holds membership in national trade associations such as ACA International, the Association of Credit and Collection Professionals (ACA). Members of ACA agree to comply with all federal and provincial laws and regulations, as well as the ethical standards and guidelines established by the association.

Training and Development

Ask if the agency’s employees receive on-going training and education. ACA members have access to educational materials and seminars covering all aspects of collections. Although these opportunities are voluntary, participation indicates that the agency is responsible and recognizes the importance of professional, competent employees.

Insurance

The purchasing of Errors and Omissions Liability Insurance (E & O) can also be an indicator of a conscientious agency. This insurance often extends coverage to the credit grantor as well as the agency.

This is important because creditors can face litigation as a result of alleged violations by their collection agency.

Look for coverage on claims brought by consumers for wrongful acts such as libel, slander, wrongful eviction, and wrongful entry, and harassment, invasion of privacy or interference with business. E&O Insurance should specifically cover violations of the FTA or Fair Trade Act. Clients of ACA members can request to see an insurance certificate for Errors and Omissions Liability Insurance.

The above suggestions are important to consider when selecting an agency. Competition among collection services is good for you as the client. This competition contributes to a more professional and efficient industry. By carefully evaluating your company’s needs, as well as the capabilities of the collection services available, you can maximize your accounts receivable income and ensure that your customers are handled properly. Careful selection of a third-party collection agency strengthens your bottom line and helps you retain customers, leading to a more profitable business.

ACA is an international trade organization with approximately 5,300 members including, third-party collection agencies, creditors, attorneys and vendor affiliates. Headquartered in Minneapolis, ACA serves members in the United States, Canada and 58 other countries worldwide. ACA was formed in 1939 to help third-party collection businesses provide the best possible services to their clients, to serve as a clearinghouse for information and establish nationwide professional and ethical standards for the collection industry.

Today, as a key source of information for the collection industry our commitment to our members and their professions shows through in our emphasis on leadership, innovation and information. For more information visit ACA’s Web site at http://ww.acainternational.org.

Managing Your Receivables for Top Performance

2014-02-13T14:13:00.001-08:00

There are certain key performance indicators (KPI’s) that any business can implement to significantly increase its odds of not only surviving but help it to thrive.

Each segment of your business, including your credit department, should have its own sub-set of KPI’s to ensure your cash flow is optimized while managing costs.

Here are the compelling reasons to carefully manage your accounts receivable:

· If one maintains a systematic method of managing accounts between 30-60 days past due, you should see an 85% reduction in accounts aging past 60 days.
· After 60 days, the probability of collecting your account is 80%, at 90+ days, it slides to just 70%
· If allowed to age past 90 to 180 days, the chances of a full recovery are now 54%!

So what steps can you take to maintain control of your receivables?

Know Your Customer - Paretto’s Principle holds true in most companies that 80% of your revenue is generated by 20% of your customers. Segment your customers by assigning codes. For example:

A. Best customers, great margins, pays within terms, few service issues.

B. Bread & butter clients, consistent orders, no price haggling, pays no later than 45 days,

C. Complains about everything, many warranty issues, stretch payables for a long time, takes unauthorized discounts. Customer you wish you hadn’t met.

D. Dead. These are customers purchased from you once and you haven’t heard from in a long time.

Start the Collection Process Early - Sometimes all it takes is an automated email reminder, or a copy of a statement, that can get the job done. This is the first step in helping to classify/segment your customer base. When the early reminder doesn’t elicit a response, these are the customers that may require personal contact. Always make contact with these customers no longer than the mid-point of your first past due period. For example if your terms are 30 days- make sure you personally contact your customer at day 45. Studies indicate that personal contact at this stage of delinquency can reduce that number of customers reaching 60 days, by as much as 85%.

Follow-Up – If your receivable still remains unpaid by this point, and there’s no diligent follow-up, then you have effectively given your blessing to be paid sometime after 60 days. Talk to the right person at your customer’s office who can sign a cheque. Get a firm commitment as to a date when the funds will be received. Confirm your understanding of the arrangement while you have your customer on the phone and again via email right after you hang up.

Pull The Trigger – if by 120 days you still have not received payment- it’s time to take further action. This is the point where most customer-service oriented creditors blink as this step can be uncomfortable. If an individual runs out of money – you can still collect from them when they get back to work.

If a company runs out of money – it’s dead.

At this point we recommend a Ten Day Demand letter be sent advising the customer that unless fall payment is received by a specific date, their account will be placed for collection.

To make the decision to take action easier for creditors, the Third-Party Collection industry has developed a Ten Day Demand letter which creditors can use free of charge. It works like this:

· Letter sent to customer on collection agency letterhead giving the debtor ten business days to remit full payment directly to the creditor.

· If the debtor pays the bill within the ten day period, there is no charge to the creditor.

· Should the debtor pay only a portion of the bill or nothing at all, then their account rolls into the regular collection process of the collection agency. Funds paid after this date will be subject to your pre-determined fee agreement.

All creditors, who use this service, like the certainty that they made the right decision at the right time. If the customer fails to remit – then it was the right time to hire a third party.

To learn more about our Ten Day Demand System, click here and fill out the form.

Credit Literacy for a Young Person You Love

2014-01-13T11:30:00.000-08:00

Generally our focus is on commercial debt and commercial transactions; however in this issue we will be discussing credit and financial literacy for high school students. Take this home and have a discussion with your own children or someone you care about.

Some of our community involvement activities centre on personal credit issues. We provide a credit seminar to local high schools. It is part of the Career and Life Management program (CALM). There is only a paragraph dedicated to credit and its use in the textbooks. As older consumers will attest, there is much more to be learned about the subject and it would be great if it didn’t have to be learned the hard way!

Here is the seminar outline that we use:

Credit is defined as: confidence in a purchasers ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.

Examples of credit: cell phones, gym memberships, library cards, student loans, Visa, MasterCard, store credit cards, utilities.

How do you get credit? 1) Capacity – Cash Flow (job)

2) Character – Attitude

3) Credit worthiness – Payment habits

4) Conditions – Layoffs (bad economy)

Cost of Credit:

Examples of common credit issues: roommates, cellphone bill, gym membership

How long do I have to fix the problem? Generally 90 days to pay all arrears.

Collection Agencies – What happens if I don’t pay?

Bankruptcy – A Credit “Mulligan”

Budgeting - Importance

Q & A

It has been our experience that gym memberships, cell phones, and roommates are the most common reasons a young person will have credit troubles. Have this conversation with the young person and explain to them the responsible use of credit and how it will either help or hinder them in the not too distant future. A great credit rating opens up many possibilities whereas a poor one can hold you back for a long time

Priority Credit Recovery Inc. and Account Adjustment Bureau save US Producer with Innovative Solution.

2014-01-10T14:17:00.000-08:00

PCR received a collection account from one of their Multi-National Canadian clients for over $100K against a USA Producer. PCR engaged their USA subsidiary Account Adjustment Bureau. The documentation consisted only of invoices, a name and number.

An investigation was conducted; the debtor was contacted who admitted to receiving and selling the product. There was no dispute. They cited poor financial planning and cost overruns as the cause for non-payment. They could not pay and legal action appeared to be the only recourse. It was clear to PCR/AAB the debtor needed to restructure, increase profitability by lowering production costs, plus they needed better equipment.

A solution was proposed by PCR/AAB and accepted by the client and debtor. PCR/ AAB drafted a loan agreement, incorporated Personal and Corporate Guarantees, interest and a fee structure for the service. The debtor converted the payable to a term loan, which enabled them restructure, obtain capital financing, increase profitability and expand their market share. The client converted the receivable to an investment asset and continues to do business on a COD basis.

The supplier and producer continue to have a mutually profitable relationship. USA/Canadian International Relations improved with this innovative solution proposed by highly trained professionals who went outside the box. This example is proof that PCR/AAB professionals look beyond the obvious when collecting a debt.