Investing in Your Collections Process

03.11.2014 Investing in Your Collections Process
by PJE

RAMP Worldwide, powered by NCS Companies, is a worldwide accounts receivable management company, and collection consultancy.

Partnering with a worldwide collection partner, believe it or not,  is about retaining control of your company's receivables.  I know, at first glance, this does not make a lot of sense.  If I am giving up on trying to collect from a past due customer and send the account to a collection agency, how is that retaining control of the receivable?

By partnering with a trusted collection firm (one that works within your industry, for like minded companies or competitors) you are making an investment into your company's most important asset, its accounts receivable.  You are committing to being paid on your terms, and showing your customer that you are serious about payment.

In our daily workflow here at RAMP Worldwide we are acting as an extension of our client's credit and collection function.  We are not supplanting our client's in house collection efforts, but rather augmenting those functions by bringing the leverage of a third party dynamic.  A dynamic that is impossible to replicate through your own house collection effort.  What is this dynamic?

1. An objective and unemotional dedication of resources whos sole function is the pursuit of payment in full.  

2. A third party collection vendor is untethered by the many other internal responsibilities an accounts receivable department has on a daily basis.  Again, focus is solely on collections.

3. Once a delinquent customer is escalated to a third party for recovery the stakes inherently change.  A professional approach by the third party collection vendor will be in an assertive manner with an eye towards bringing the customer current, and getting them buying from you once again.

4. Employing a qualified/trusted collection vendor can be as much about retaining the customer, as it is about getting paid on a past due balance.. Helping to repeat sales. As we all know, the most profitable sale is the repeat sale.

5.  Upwards of 25% of the cost of doing business can be attributed to inefficiencies.   Is it not inefficient to continuously pursue unresponsive customers or customers who do not come through on promises?  A dedication of these internal resources will have a trickle down effect and impact keeping control of your fresher receivables.

6. By partnering with a trusted collection vendor you can be lowering those inefficiencies and streamlining your collection process.

7. By outsourcing your most problematic and pain point receivables, you are creating efficiencies and driving home the message that you are in control, are serious about payment, and you want to be paid on your terms.

Using the resources of an outsourced collection vendor has nothing to do with giving up on your customer or losing control of your receivable.  The opposite is actually in effect.  Control is maintained, inefficiencies are reduced, DSO's are lowered, and net back on dollars are in line to substantially increase.

Engaging a vendor for collections should not have to be that costly to your bottom line.  With a reputable qualified collection vendor, contingency fees for a successful collection should fall into the 15%-30% range, so your company is not taking a costly  " haircut"  on revenue.   Think of it this way, for delinquent customers that never pay, go stale, and out of business....the fee is 100%.