-          Unpaid invoices are collected in a correct and professional manner.

-          The term of payment shortens.

-          The Days Sales Outstanding (DSO) decreases.

-          Liquidities increase, while work capital decreases.

-          More cash will be available to invest in sales and expansion.

-          The enterprise can focus itself on principal activities, which causes optimisation.

-          The costs of debtor management or collection decrease.

-          You gain access to professional knowledge and know-how.

-          Unpaid invoices are collected in a correct and professional manner.

-          The term of payment shortens.

-          The Days Sales Outstanding (DSO) decreases.

-          Liquidities increase, while work capital decreases.

-          More cash will be available to invest in sales and expansion.

-          The enterprise can focus itself on principal activities, which causes optimisation.

-          The costs of debtor management or collection decrease.

-          You gain access to professional knowledge and know-how.

Outsourcing activities, other than principal activities, can be the fundamental reason why small and medium enterprises choose to contract their debtor management and collection out. Of course, this is not the only possible reason.

Decreasing work costs and optimising the efficiency of management can be equally valid reasons.

The company, which contracts out debtor management and collection, can entirely focus on the activities that contribute to the optimisation of the enterprise.

A small (or medium) enterprise will receive the exact same know-how and means as a larger company. Each enterprise has access to the professional knowledge, necessary to take the right decision under difficult circumstances.

Please give us access to the details, mentioned below:

-          (Inter)national demand of payment?

-          Expiration date and amount, mentioned on the invoice?

-          Right to damage costs and interests?

Please send these details by e-mail or fax (+32 9269 52 99)

The first two stages of our credit management usually involve working in the name of your company, unless you choose otherwise.

Depending on the chosen procedure, contact with your debtor can take place in various manners, but always with the highest regard and respect for your enterprise's image and for the debtor.

1.      Contacts by telephone

C&J Credit Services guarantees an adequate follow-up of the procedure by our own Credit Collectors.

2.      Reminders in writing

In deliberation with you, C&J Credit Services will create reminders which will be sent at regular and fixed times. The written demands can be printed on your company's stationary paper or, if desired so, on our own.

3.      Amicable arrangements

After the debtor  exceeds the agreed term of payment, you can allow C&J Credit Services to send an amicable arrangement. This means we approach your debtor in our own name. You have the choice between following actions:

            Course in writing

The first step we take in each procedure involving amicable arrangements, is a reminder in the name of C&J Credit Services. If necessary, further reminders or legal actions will follow.

Course by telephone
C&J Credit Services guarantees a very strict follow-up of unpaid invoices during an amicable arrangement. This course  follows the written order. We hold no limit on the number of conversations necessary to solve the problem of overdue invoices.

Course of visit
If neither written nor telephonic contact gains positive results involving the issue, we will visit the debtor to negotiate unpaid invoice matters. This occurs in deliberation with your company.

4.      Legal procedure 

In the matter of legal procedures C&J Credit Services joins forces with a fixed law firm, which offers special rates for files received by C&J Credit Services. The legal fees will be billed directly to your enterprise.

Please contact us regarding our rate costs.

• In a lot of companies, credit collection and debt collection is less important then gaining new prospects.
• Credit collection and debt collection is not centralised at one place.

Reasons why Credit Collection and Debt Collection should be outsourced:

•  Credit collection is not the core activity of your company
• Credit collection is not the most critical position within your company

This article concerns:credit management - debt collection - legal debt collection

It is becoming the norm for almost all businesses to offer credit to their customers (depending on your type of business) and so it is not surprising that this is one of the largest influences on poor cash flow. This is where a good management system needs to be integrated using budgeting and cash flow forecasts. More importantly, a good credit policy and effective credit control needs to be adopted.

When customers fail to pay you back at the agreed time, it can have a major impact on your cash flow particularly if the money owed is a significant amount. This can leave you short of money at that point in time (and possibly for longer if the debt becomes an aged debt) and leaves you with the trouble of raising more finance to compensate for the delay in payment.

Failing to keep control of your debtors is one of the main causes of having bad debts and so it is important that you follow up immediately on any late payments. At the same time, it is important that you keep good relations with your customers, particularly the important ones.

Larger businesses have been criticised as they often 'abuse' smaller businesses offering credit by purposely delaying payments knowing that they will always be regarded as a 'major' customer to the business. A change in legislation (7th Aug 2002) has now allowed businesses to claim late payment interest from each other, which can also be charged to invoices that date back from 1st November 1998.

(This article is written by bizhelp)

A few years ago I was at a major intermodal transportation and railroad company for training sessions on Collection Skills and Receivable Management. The training was to be imparted to five groups spread over five days. My initial interview with management was fairly straight forward where the elements and the scope of the training were defined. The elements incorporated for training were Collection Techniques, Credit Management tools and Role play.

On the first day of training around the first break I realized that the collections staff was made up of people who had years of collections experience either at this company or prior to joining to the organization. The accounts were not profiled and were rather assigned arbitrarily and as a result an account manager ended up having a mix of different size accounts located in different provinces or states.

The group that I was teaching was an enthusiastic batch; however one of the main concerns was that most of the proven collections techniques that were being presented to them were met with "we can't use those approaches here". As one of the collections staff mentioned to me, "we don't do collections here, we do CORRECTIONS".
I asked what he meant by that and his response was that 80% of their time was spent on reconciling accounts, correcting errors.

Dealing with the Automotive Industry, Chemical Industry, Petroleum Industry and large accounts in general, creates a huge challenge for an A/R department. Multiple invoices leads to missing invoices, pricing issues, delivery problems, damages, short payment and a host of other problems that results in millions of dollars sitting in unpaid receivables. Just ask any Credit Manager what his/her policy is on collecting from their large accounts and you will most likely hear that issuing credits and debits and reconciling accounts is the biggest setback to getting paid, things that they have little control over.

In this age where the customer is deemed to be always right, the credit management team requires to be sensitive to each and every customer. Having said that, we can perhaps afford to lose a small business client and it will not bankrupt us, but can we afford to lose a big client of ours that adds big dollars to our revenue stream?
The Sales department takes extra strides in ensuring that our large accounts are happy, just look at the concessions they allow; lower pricing, extended terms, wining and dining the purchasers and decision makers, never mind if we are not making any profit on these accounts. Management tends to supports these efforts because at the end of the day investors and the lenders focus on revenue trends. Anyone who has put a business plan before the bank knows that they want to see what your anticipated revenues are, with improvements year over year.

Ask sales, and they will talk about revenue that leads to greater profits or bottom line. Ask the credit department and the concern is cash flow (aren't we obsessed with DSO?). Large accounts may have overdue amounts that your collectors have been working on for months trying to collect only to find out that the customer does not actually owe this amount in dispute.

When I was a consultant with D&B (formerly Dun & Bradstreet), I once visited a company that sold perishable foods on terms of net 7 days. The credit manger was new to the organization and when he looked at the A/R he realized that there was over 8Million dollars in disputes. He took 7 of his 30 collectors and assigned them to these accounts. His instructions were to find out what were the issues surrounding non-payment. What they uncovered was that the payment terms of Net 7 days was a quick turn around and many of their customers on receiving a shipment would pay the invoice in full within those terms. However, after finding damages to the same shipment they would then deduct the amount off the next invoice a week later. The customer was justified in doing so and did not owe this amount but it still appeared on the A/R list and a collector was wasting time attempting to get paid. There was never a paper trail or procedure set up to deal with these issues before which led to reconciliation nightmares for both the collectors and the A/P clerk on the customers' end. To resolve this and other issues, he realigned their system for deductions management which included proper documentation and strict timelines to resolve issues. His team managed to reduce the A/R to a million in just one month. Putting a focus on Correction issues improves collection issues.

At many of my training sessions I am asked the question as to ‘How to deal with large accounts?'
I believe that the credit department should ensure that the person who is assigned a major account of the organization should know the account as intimately as the salesperson assigned to the account. Remember we are dealing with the A/P department where sales generally deal with the Purchaser. Have our A/R Representatives ever met with their counterparts. I know many of you may say that we can't afford to send our collectors to meet with their accounts but if the result is collecting millions of dollars earlier that we are doing now, what impact will it have on or cash flow and DSO?

I mentioned this at a collection seminar and one of the participants told the group that he visited his A/P contact in another province racking up an expense of $1500 but came back with a 1.5 million dollar check and an account that now pays him on time all the time. Was it worth it? I believe so. Many collectors who are given the responsibility of collecting from our major account only deal with the A/P clerk, have we ever encouraged them to move up the ladder and communicate and associate with the A/P management group? Nothing against A/P clerks but it is the manager who signs and releases those checks.

One of the most important things for an A/R person to understand is the accounting processes that their customers are using. Many large accounts have very sophisticated accounting systems for processing invoices and payables. Why have we assumed that our accounting is compatible with theirs? Are there any special requirements that we or they have to meet? Have we developed systems for our collectors to gather information from our customers to understand what they want from us? Do we ask our customers what the customers that are paying on time are doing to get paid on time?

I do believe that out large accounts are our bread and butter and we should ensure that we keep them happy and close to us. Many large accounts however use us as their bank (interest free loans). Delaying payments to their creditors allow them to pass the savings to their customers and gives them that added competitive edge. Many of them use issues such as discrepancies on invoices to delay payments of the full invoices for months and being an account that everyone wants to sell to gives them the bargaining chips to take advantage of this. They would not even allow us to develop relationships with the A/P department by changing the A/P person and not allowing visits from our A/R department.

I met one credit manager that dealt with one of these accounts and was successful in keeping them within terms. The one benefit that he had was that his company was also a large well known enterprise that had an array of products that is always in demand. Beyond the fact that he had a lot of leverage he was able to resolve the issues faced by the customer by developing a system that ‘coded' all deductions. He then set up a process and a timeline to deal with each of these deductions. His success however was attributed to his access to the management team at the customer and their buy-in to the system that he had created.

Have we ever considered that an account may move to the competition because they are frustrated with problems that they are facing with our A/R department as far as the accounting issues, deduction management systems and collection calls for issues that turn up month after month? Would we have done justice to our organization if we are not focused on remedying the problems with our Major Accounts? Remember that the credit and collections department is an extension of the Selling department within the selling process.

Every account is different but we must set policies and approaches to deal with accounts that fit the same profile and keep our fingers crossed that they will be successful at least 80% of the time. There is no magic solution for dealing with any account that is not paying. I have proposed dealing with large accounts as a Corrections issue to resolve a Collection issues

A good Credit Management does not only bring money into the company, it will also increasy the liquidity of the company.

If the payment date has been crossed with 30 days, the profit will be 23,3% lower.

Thats why I want to conclude with the words: "Is it acceptable that you have to loan expensive money, so your customer doens't have to?"