Collector - October 2016 - 36
BUSINESSOPERATIONS
A Running Start
More commercial collection agencies
are collecting younger debts as
clients' ancillary AR departments,
making first-party outsourcing
services more accessible to the
B2B market.
By Bill Mann, IFCCE
O
nce focused almost exclusively
on eleventh-hour contingency
collections, a growing number
of commercial collection agencies are
collecting debts as young as 30 days past
due, making the benefits of first-party
outsourcing more accessible to B2B clients.
This trend is fueled by business forces acting
on both creditor companies and agencies.
For most B2B companies, the first-party
collections programs offered by business
process outsourcing services aren't usually
an option, as BPOs often require a minimum
number of accounts larger than the relatively
small client base of most B2B businesses.
But the B2Bs are dealing with the same
pressures to do more with less, a trend
that has led consumer-based businesses to
outsource accounts receivable functions.
Outsourcing some or all of these a-little-late
accounts to a commercial collection agency
improves cash flow and frees the business to
acquire more customers-even when owners
or stockholders are not ready or willing to
authorize more credit department hires.
Because the debts are younger and easier to
collect, first-party collections cost less.
The growing acceptance of telecommuting
is also contributing to the trend, added
Greg Cohen, president of the International
Association of Commercial Collectors
and president-CEO of Caine & Weiner.
"When you're already moving away from
the corporate culture of having people
sitting next to each other, you become
more comfortable with using an outsource
partner," he said.
From the commercial collection
agencies' perspective, offering first-party
36
services grows business by bringing in new
clients and providing additional services
to existing clients. "It diversifies revenue
and, because clients are usually charged an
up-front flat fee, helps predict cash flow,"
said Joe Batie, chief commercial officer at
Caine & Weiner.
Ken Wojtach, vice president/operations
of HS Financial Group, which is launching a
new program, said his clients have asked for
this. He discovered that many creditors' late
accounts were in a collections limbo, with
debts not large enough to get much attention
from limited in-house staff, not numerous
enough to be sent to a BPO and not old
enough to make the business willing to send
them into third-party collections.
HOW TYPICAL COMMERCIAL
COLLECTORS' FIRST-PARTY
OFFERINGS WORK
While no two commercial collection
agencies' first-party or similar-to-first-party
programs are identical, IACC finds they
tend to have traits in common:
* A separate cadre of employees makes
the first-party calls using gentler,
customer-service approaches and
language.
* Usually, the agents contacting the latepaying customers identify themselves as
representatives of the creditor company.
This is not universally true, however,
and is a matter of agency and client
philosophy: Some want softer-thanthird-party techniques, but with a little
added punch that comes with the words
"collection agency."
* Some agencies are willing to charge on
a percentage basis after debt collection.
* Multi-year contracts are not required;
this is another way agency offerings
differ from many BPOS.
PROBLEMS, SOLUTIONS, ADVICE
FROM ACCOUNTS RECEIVABLE
In 2014, Ryan Ross, director of Global
Treasury for education technology company
Blackboard, had a team of nine accounts
receivable professionals serving 6,000
customers. If a $25,000 bill was late, someone
from the team would certainly call.
"But there was no way we could get
to the $400 or $500 invoices from a pure
bandwidth perspective," he said. "My team
might get to follow up only once every
couple of months."
As a result, smaller accounts would age
past 90 or 180 days with a single call or
email. Complicating matters, every school
has different back-office procedures, and
it wasn't unusual for a bill to go unpaid
because it didn't reach the appropriate
department or it had erroneous billing
information. Reaching all of these
customers with Blackboard personnel was
impossible, but Ross was reluctant to send
the accounts to third-party collections.
ACAINTERNATIONAL.ORG
http://www.ACAINTERNATIONAL.ORG
Table of Contents for the Digital Edition of Collector - October 2016
President’s Page
Industry News
Best Practices
FYI
Collection Tips
Connect the Dots
Looking Deeper
Head of the Class
Calendar
Honor Roll
The Formula of Five
How to Create Winning Bids and Proposals
A Running Start
ACPAC Election Watch
ACA’s Industry Advancement Program Aids Eleventh Circuit Win for Member Company
Compliance
ACA SearchPoint
Last Word
Collector - October 2016 - Cover1
Collector - October 2016 - Cover2
Collector - October 2016 - 1
Collector - October 2016 - 2
Collector - October 2016 - President’s Page
Collector - October 2016 - Industry News
Collector - October 2016 - 5
Collector - October 2016 - 6
Collector - October 2016 - 7
Collector - October 2016 - Best Practices
Collector - October 2016 - 9
Collector - October 2016 - FYI
Collector - October 2016 - 11
Collector - October 2016 - Collection Tips
Collector - October 2016 - 13
Collector - October 2016 - Connect the Dots
Collector - October 2016 - 15
Collector - October 2016 - 16
Collector - October 2016 - 17
Collector - October 2016 - 18
Collector - October 2016 - 19
Collector - October 2016 - Looking Deeper
Collector - October 2016 - 21
Collector - October 2016 - 22
Collector - October 2016 - 23
Collector - October 2016 - Head of the Class
Collector - October 2016 - 25
Collector - October 2016 - 26
Collector - October 2016 - 27
Collector - October 2016 - Calendar
Collector - October 2016 - Honor Roll
Collector - October 2016 - The Formula of Five
Collector - October 2016 - 31
Collector - October 2016 - How to Create Winning Bids and Proposals
Collector - October 2016 - 33
Collector - October 2016 - 34
Collector - October 2016 - 35
Collector - October 2016 - A Running Start
Collector - October 2016 - 37
Collector - October 2016 - 38
Collector - October 2016 - 39
Collector - October 2016 - ACPAC Election Watch
Collector - October 2016 - 41
Collector - October 2016 - ACA’s Industry Advancement Program Aids Eleventh Circuit Win for Member Company
Collector - October 2016 - 43
Collector - October 2016 - Compliance
Collector - October 2016 - 45
Collector - October 2016 - ACA SearchPoint
Collector - October 2016 - 47
Collector - October 2016 - Last Word
Collector - October 2016 - Cover3
Collector - October 2016 - Cover4
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