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Talking 'Cent$'

with Rick Rainho

Rick Rainho, Regional Vice President of Transworld Systems’ Commercial Division, is a 20-year veteran of the collections business, which means he has a unique perspective on the economy and how its ebb and flow affects Transworld’s clients.

“Currently we are in the midst of a financial crisis like none other we have ever seen before,” Rainho says. “And though many analysts suggest the worst is behind us, understanding that our economy is cyclical is important to realize that what generally goes up must come down and vice versa. Right now is a good time to take full advantage of the forecasted upward trend we could be seeing in the near future. As things turn around, your debtors will have more money available to pay bills, and it is important to use this opportunity to collect as much of what is owed to you as possible. Choosing to use a third party collection agency, such as Transworld Systems, is a great decision that you can be confident will yield results. But getting your business off on the right collections foot is just as important to your collections process. There are ways to guide your customers into being the respectable payers they should be, even while weathering the financial storm.”

Below are some questions and suggestions that might be helpful:

    1. Do your customers understand your payment expectations?
      It is extremely important to make sure that your customers understand what you are expecting from them. You must set the tone right from the start. Have a defined credit policy that you include on all timely sent invoices, and remember to include a convenient way to air disputes.
    2. How often should I contact my overdue customers?
      The more contact the merrier, but as a standard practice, it is a good idea to contact them every 10-14 days. Let them know that you are still there and expect payment. Remember, out of sight is out of mind. You really want to set the tone in the beginning. If the client doesn’t have the resources to accomplish this, then maybe Transworld’s Reminder Call Outsourcing program can be of assistance.
    3. As long as the customer is not calling me, then everything is probably okay as they are not disputing the debt and will eventually pay, right?
      That is wishful thinking. It is important to take out all personal feelings and assumptions and continue with a consistent approach in collecting your receivables. Stick to the facts because they are undisputable. Facts mentioning that the bill is 28 days past due or that you have left four unreturned messages for you to call back to discuss this matter, etc. are good leverage. Making assumptions or excuses will only get you into trouble.
    4. Is it true that once I place an account with a collection agency I don’t have to do anything else?
      No! It is important to make sure that your staff is trained to take incoming phone calls and refer the debtors back to the collection agency. All incoming payments must be reported, which is extremely easy and can be done on Transworld’s Online Client Portal 24 hours a day with just a few clicks.

It is also always a good idea to maintain copies of the first checks that come in the mail. Even if the accounts are not delinquent, you never know when giving your collection agency bank information may help collect a debt.

  1. If I know the customer has the money, I should expect it to always be collected, right?
    In theory, it would be great to think that 100% of accounts that are assigned will be collected, but that is just not the case. Reasonable expectations should be discussed, as well as appropriate settlement authorities. Realize that it is sometimes quicker and cheaper to take a settlement than to litigate in court.
  2. In today’s tough economy, what’s the most important thing a business can do to secure stability?
    Realizing that cash flow is crucial to the success of any business, it is important to understand that many businesses are struggling in these tough times.

What used to be acceptable last year might not apply now in our ever-changing world. Where placing accounts at 120 days used to be adequate, now 90 days may actually be too late as others have already beaten you to the punch to get their money first. Being aware of this and protecting yourself by placing accounts sooner, getting into the habit of updating information on every contact to include new addresses, phone numbers, and contact names, as well as attempting to get personal guarantees, will help to either collect or avoid collections all together.

You can make excuses all day long for things you have little or no control over, like the economy. However, focusing on things you have no control over is futile. In today’s economy, it pays to be proactive, and setting the tone of your payment expectations from the start will go a long way. Working on the important areas of your business that you can control will put you on the track to financial stability and aid in the development of your business’ growth vision.

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