Collection Agencies And Strategic Plans – 2 Of 3
By Dean Kaplan+
During tough economic times, strategic planning can help companies and collection agencies stay competitive and profitable. Strategic planning can also be helpful for departments within a company or collection agency because planning leads to a proactive rather than reactive approach to doing business. A proactive department gets things done, and gets noticed for its efficiency and productivity. This article is the second in a three part series and will focus on the first step in creating a strategic plan for the credit department – assessing the present. The final article in the series will look at determining the future, and what actions need to happen between now and then.
A very important step in developing a credit department strategic plan is to take a hard look at what is happening right now. This doesn’t mean, just looking at what is taking place within the credit department, but also looking outside the department at the internal workings of the company as a whole, and the company as it fits into the industry and economy.
The credit department should start this evaluative process by looking at its role within the company and determining if it is adequately satisfying the needs of the company relating to the credit and accounts receivable functions. Does the credit department have the necessary resources, including staffing and technology to perform its varied credit functions? This question alone may take quite a bit of time to define and understand. A huge positive of looking at the department in this way is that it may help the credit manager identify areas where efficiencies are possible or duplicate efforts can be eliminated.
If the credit department hires agencies, this is a good time to look at the current status of its collection agencies. Are the agencies providing the level of service that the credit department needs at this time? Are the agencies successful in their accounts receivable collections? Is the fee structure enabling the credit department to add to the company’s bottom line? Are the debt collections coming in enough to adequately offset the fees being charged by the agencies? Does the credit department need to reassess the quality of its agencies? Are there long-standing relationships in existence which may be marrying the credit department to the collection agency, which when removed show a less than stellar debt collection history by a particular collection agency? When a department or company is committed to looking to the future and strategic planning, these tough questions need to be asked. Sometimes the status quo can unknowingly be a big negative. Examination can bring these deficiencies to light.
Once the hard internal look is complete, it is a good idea for the credit company to look at the bigger pictures. How does the company currently fit into the industry in the current economy? What is its market share? Who are its key competitors? Is the economy growing, stagnant, or in decline? How is the company performing in this economy? Is the company increasing sales/market share, maintaining, or struggling? This external look will provide the credit manager with a lot of important information. These data will be useful in the next step, which will involve looking at what the future goals of the company might be, and for the credit department in its support of the company in this context. Connecting the dots between the present and the future will lead to the strategic plan. What strategic actions will the credit department need to take to help the company get to the desired future? These actions might include such things as new credit policy development, additional staffing, new technology or additional collection agency assistance.
Click here if you are ready to go to the final article in the series Collection Agencies And Strategic Plans – 3 Of 3. Click here if you missed the first article Collection Agencies And Strategic Plans – 1 Of 3.
The Kaplan Group is a boutique collection agency specializing in large (over $10,000) debt collections due from businesses. Founded in 1991, the company has a stellar reputation (A+ rating with the Better Business Bureau) and is recognized as one of the leading collection agencies for results on large and complex matters.