In a previous blog post, we discussed various reasons it’s difficult to develop an effective AR collection strategy and how to overcome some of the most common obstacles. But developing a collections strategy is only part of the process – at some point you need put that strategy to work. So let’s take a look at some of the challenges in implementing collection strategies and ways to overcome common roadblocks that will almost certainly pop up during the process.
Often, a company will establish a new collections policy but the account manager has a difficult time actually putting the strategy to work because of the following 3 reasons:
Collectors resist following new collection strategies that do not match their experience. Experience equals street credibility. The collector may have more experience than the manager setting the collections strategies, so the collectors feel they know the history of the collections efforts and understands the customers better. In some instances, the collector has dealt with the customers for years and knows the payment trends, who to call, and when to raise a concern.
Solution: the best way to overcome this obstacle is to earn collector buy-in by getting them involved early, considering their experience, and soliciting their input in setting the new collection strategies. That way, they have a vested interest in implementing new policies that are essentially a result of the strategy they helped to develop.
Some collectors have a wealth of undocumented knowledge gained over years of direct communication with customers. If that knowledge isn’t considered, documented, and incorporated during strategy development, it becomes difficult for collectors to trust data and metrics regarding payment trends, benchmarking, and the overall collections strategy. In short, collectors may continue to rely on their own trusted intuition rather than the new system.
Knowledge is power – but undocumented knowledge that only exists in a collector’s head walks out the door when that person leaves at the end of the day or leaves the company.
Solution: one way to overcome this issue is to brainstorm with the collectors about your accounts and ways to deal with different types of customers, categories, and even individual situations. During this exercise, it’s important to document current processes, identify gaps against industry collection best practices, and tap into all of this valuable knowledge that each collector can offer.
Let’s fact it, the unknown and unproven can be scary. There’s comfort in doing things the way they’ve always been done even if that method is clearly broken or ineffective.
Sometimes, companies or collectors simply don’t trust an automated collections management system to recommend the right activities, correctly document tasks that were performed, or accurately record which payments were/were not received. In this case, people go around the system and revert back to routines they’ve become comfortable with like using spreadsheets and notepads.
Solution: the best way to overcome this issue when implementing a new collections system is to involve collectors in processing test transactions and validating the results before taking it live.
Everyone responsible for collections – sales, accounting, management, etc. – should be following company-defined strategy and communicating activities and results. Involving collectors in the setting, implementing, and following of company collections strategies is essential to gain their buy-in to the process. Without buy-in, even the best strategy or fanciest collections software will be extremely difficult to implement and doomed to failure.
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