Collection Agencies And Strategic Plans – 3 Of 3
By Dean Kaplan+
Strategic planning can separate the successful companies and collection agencies from the not successful. A big reason for this is that planning forces a company or collection agency to look to the future and set goals. Strategic planning can be helpful for departments for the same reason. When a goal is set, it is then possible to plan the actions necessary to work towards this goal. This article is the third in a three part series and will focus on completing the strategic plan for the credit department – assessing the future and determining the necessary action steps to get there.
Once the present state of affairs has been carefully evaluated and understood, the next step is to look to the future. Any department’s strategic plan must support the overall company’s future goals. Therefore, it is important to understand where the company expects to be down the road. The first thing that needs to be defined is how far out into the future the strategic plan is going to go. Due to the technology explosion we continue to experience, it is not advisable to look too far ahead because no one knows exactly what is coming via technology. Therefore, it is best to focus strategic planning on two to three years out.
Here are some questions that need to be answered in order to develop the credit department’s strategic plan:
o How much growth does your company expect to experience during the next three years? In the case of the credit department, it might be good to look at percentage growth of sales as well as number of customers. The strategic plan should take into account how this growth will affect the credit department’s need for additional staffing, technology and collection agency assistance to support this growth projection.
o Will there be any change in the products or services sold by the company? If significant changes are planned, the credit department will need to look at its processes to assure that existing systems will support the expected changes.
o Where does the company plan to do business in the future? If the company plans to expand operations into new regions, or even new countries, how will this affect the credit department and how it is set up to perform its functions? The credit department provides important services to many different departments within a company. If these services need to be available to even more departments, this could lead to additional requirements in staffing, technology, etc.
o How competitive does the company plan to be in the future? This can lead to either easing or tightening of credit policy standards, depending on what the goal of the company is. If the company plans to expand into new untapped territory, it is likely that a looser credit policy may be necessary to attract new customers. The credit department will be required to study the new areas and become knowledgeable to provide the necessary support.
o What changes can be anticipated in the internal functioning of the company as it moves forward? If the credit department can anticipate any restructuring that may be on the horizon, plans can be developed to support these changes. For example, new reporting can be developed in anticipation of new territories or products.
o Are there any computer systems that need to be updated or added to enable the credit department to support the company’s future goals? If so, this should be put into the strategic plan and the credit department should research the systems available and make it own recommendation. The credit department wants to lead this charge, not rely on the computer systems department to make the choice which may not be optimal.
o What legal changes in the credit function are expected? Accounts receivable debt collections must comply with all applicable laws. The credit department should be fully aware of the laws of today and anticipate known impending changes in laws. Often hiring a collection agency is a good way for a credit department to stay abreast of changes in laws. Collection agencies know the laws relating to debt collections. Using ethical collection agencies to assist in the debt collection process will assure that laws are followed.
Once you have answered these questions and developed actionable answers, the final and most important step is to come up with the action items that will get you from today’s position, to the future as you have defined it in your strategic plan. At this point, it is time to get management buy-in so that you can move forward with your plan and be on the cutting edge of supporting the company’s future growth.
Click here if you missed the previous articles, starting with 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.