Collector - October 2016 - 38

BUSINESSOPERATIONS Ross and his team kept their largest accounts, but outsourced the smaller ones to a collection agency hybrid program through which agents work relatively young debts with customer service techniques but identify themselves as agency employees. Since beginning the relationship, Blackboard has sent 3,000 late invoices through the program and collected $27 million. "This program and first iteration of placed items resulted in a nine-day reduction in our overall DSO-huge from a working capital perspective," Ross said. "In addition, we received very little pushback from customers, on less than 1 percent of total items placed." Ross advised companies to control their data. Blackboard's first invoice batch included all that had reached a set number of days past billing. "We did not vet the list enough internally," Ross said. On it was one of Blackboard's biggest and best customers. The customer's single late invoice was unpaid because it was working through a dispute, in the friendliest way possible. It was also about to sign a multi-million dollar contract on a new service package and was a bit unhappy to get a call about the small disputed debt. Fences mended, lesson learned. SoTel Systems Accounts Receivable Manager Delilah Morkisz was a onewoman department. "I had some softcollections that needed to be done, but I couldn't handle all of it alone," she said. The company hoped to hire more AR staff in about six months, but she needed an immediate solution. SoTel considered several proposals before outsourcing to the agency that was already providing their third-party collection services in July 2014. Morkisz placed about 250 accounts. "The biggest ones who I talked to every day, I kept," she said. "The ability to choose who we sent over was important," she added, not only because she wanted to work personally with the largest clients, but because some would have technical questions regarding SoTel services that could more easily be answered in-house. 38 ENSURING THE QUALITY OF OUTSOURCED AR A few tips to help the process go smoothly: * Hire an agency that knows your industry and understands your company and its customers. * Establish in-house, pre-placement protocol for accounts. * Agree to the metrics that will constitute success. Check to be certain they are met. * Define the type and frequency of contacts with your customer, the The agency recovered 86 percent of the delinquent portfolios within 45 days. "I didn't have the stress and I didn't have to put in as many hours as I had been," said Morkisz, who recently accepted a position with another company. She advises: Ask for exactly what you want. SoTel wanted the contractor handling these calls to make two phone calls and send one email reminder to each customer within one month. "All of these parameters should be flexible," she said. A WARNING Not every agency that says it offers these services actually wants to collect accounts while they're still young. "There are programs out there literally designed to generate contingency collections," said Rudy Schatzmann, national account manager for Altus Global Trade Solutions in Kenner, La. "They charge by the unit, often very inexpensively, but most are letter services only. There's not any contact by phone, even to make sure the letters were received. And there is a requirement that at the end of the campaign, the accounts go to contingency collection, which is where these companies are really making their money." The outsourcing partner Blackboard chose offered a guarantee: If an invoice ages out without payment, the client length of time each account will be in the program and the terms and conditions for moving accounts from first-party to third-party contingency. * Verify that the company provides adequate training and its employees will comply with your needs as well as government rules and regulations. * Get everything in writing. can substitute another unpaid invoice at no cost. Businesses can also find assurance by using an agency they already have a relationship with-ask, as some offer this service only to existing third-party customers and do not advertise. They can also hire separate agencies for first-party and third-party collections. Some agencies offering first-party service may not be deceptive, but may not be very effective either, said Steve Wolff, principal at McCarthy, Burgess & Wolff. The best way to avoid hiring the wrong agency is to ask lots of questions. "You want to know how they are going to achieve the results represented," Wolff said. "Ask what kind of contacts will be made with the late customer and for proof that the agency has adequate resources dedicated to first-party collection, from proper training to the right software." Wolff 's bottom line: "Define the metrics that will be used to measure success, so that the agency can be held accountable." Bill Mann, IFCCE, is chief financial officer for Joseph, Mann & Creed in Twinsburg, Ohio. He is president-elect of the International Association of Commercial Collectors. For more information on the commercial collection market, visit www. commercialcollector.com. ACAINTERNATIONAL.ORG http://www.commercialcollector.com http://www.commercialcollector.com http://www.ACAINTERNATIONAL.ORG

Table of Contents for the Digital Edition of Collector - October 2016