Collection Agencies Working For Credit Departments

By leyla.a (no real name given)
Collection agencies play a crucial role in the day-to-day business of many types of companies.

Customers are satisfied when their needs and expectations are understood and met or even exceeded. In addition, in the business setting, this needs to happen at the same time that resources are optimally utilized. In other words, the company isn’t losing its shirt in its effort to satisfy its customers. Many companies have developed strategies and processes to satisfy external customers. However, fewer companies have put the same effort into maximizing internal customer satisfaction. One interesting thing to note is that when internal customer satisfaction is high, generally the operation runs efficiently and productivity and morale are high. These three things in combination are known to positively affect a company’s bottom line.

When a company is looking for overall customer satisfaction, this requires that all employees work together and assist each other to maximize external customer satisfaction. Since the only way for all employees to work together well, is for internal customer satisfaction to be high as well, it becomes clear that overall customer satisfaction requires both internal and external customer satisfaction. The two go hand in hand. When we add the collection agency into this picture, the agency must also be promoting customer satisfaction with debtors, as well as providing the credit department with all the information needed to communicate with its internal customers throughout the company.

The wide range of job duties relating to the credit, collection and accounts receivable areas require the credit department to frequently interact with both external and internal customers. For this reason, it is extremely important for the credit department to fully understand the roles of other departments throughout the company with external customers and with each other as it relates to external customers. For example, if the credit department decides to put a credit stop on a customer who isn’t paying its debt, this will affect the shipping department because any further shipments will be stopped until the payments begin again. In addition, the sales department needs to be told, because it makes no sense to accept new orders, if no shipments are going out. If you add the collection agency into this scenario, the debt collector needs to be informed because he or she can then communicate with the debtor, and use the credit stop as pressure to motivate payments to be made. When all the customers, internal and external, are working together, the company operates like a well-oiled machine. When the pieces aren’t working together, the whole thing can come to a screeching halt and frustration is likely to run supreme. Clearly, overall customer satisfaction is a worthy and necessary goal for any company to strive for.

Collection Agencies And Credit Department Internal Customers

It’s important to maintain teamwork between a business’s credit department and other internal departments to maximize collection success

In most companies, the internal customers of the credit department include the Chief Financial Officer, the controller, the sales staff, the customer service staff, the shipping staff, and the finance staff. All of these functional areas provide information to the credit department, and receive information from the credit department. Obviously, open and supportive lines of communication are essential for the company to operate at maximum efficiency and productivity. “Satisfied” internal customers equate to internal customers providing and receiving timely information.

The first step to truly identifying the internal customers of the credit department is to have all employees in the credit department define their internal customers. Who do they interact with on a daily or regular basis? Why do they interact with these people? What is the function of the relationship? What information do they give or receive from these functional areas?

Once all the foundation relationships and information are collected, the next step is to create a flowchart which clearly represents the inflow and outflow of information from the credit department to other functional departments throughout the company. This information may turn out to be very helpful to the credit manager on several levels. It will better define working relationships and also may help improve efficiency within the credit department and the company if duplicate efforts or communication deficiencies are identified. Use this exercise to not only identify internal customers but also department functional improvement opportunities.

If collection agencies are involved in the credit department operations, add their functions to the flow chart. Identify what information they need to provide the credit department to ensure all necessary and salient information is being communicated to internal customers throughout the company. Identify what internal information needs to be communicated to debt collectors to maximize their collection success and the credit department’s productivity.

Collection Agencies And Internal Customer Satisfaction

Collection agencies need to be concerned about the satisfaction of Internal Customers. This section focuses on defining needs and requirements for internal customer satisfaction.

In the last section, we discussed the need to clearly identify who the credit department’s internal customers are. In addition, the functions of these departments and their relationships with other departments must be fully understood. Finally, if a collection agency has been hired to assist the credit department in its collection efforts, the collection agency must be brought into the loop to assure that all necessary information is available to the credit department as it communicates with its internal customers.

Once the customers and their functions and relationships are understood, the next step is to clarify the needs and requirements of these customers as they relate to the credit department. There are many valid ways to gain this critical understanding of the internal customers. One way is for the credit manager to talk with all its internal customers and explain the functions of the credit department to the customers. Then it is up to the customers to tell the credit manager what is needed for the customer to do the best job possible while managing resources and complying with the overall company’s goals and objectives. The positive about this approach is that the credit manager gives face time to all the customers, hopefully building relationships and trust along the way. The negative to this approach is that the data is gathered via conversations. It may be hard for the credit manager to collect the data, write it all down, and summarize it into actionable items.

Keeping internal customers happy is of utmost importance for collection agencies and credit departments

Another technique to collect the necessary information is to hold meetings where several customers come together and the same basic information is exchanged. This is akin to the focus groups used by marketing departments to test product ideas. This may be a more efficient method for the credit manager because he or she can make the explanation of the functions of the credit department to several customers at the same time, and the message will be the same for all in attendance. In addition, this gives the customers a chance to understand how their respective functions fits into the credit department’s regime, and how their functions might relate to each other. It also gives the customers a chance to identify duplicate efforts, or areas where communication should begin. The positive of this approach is obviously time savings as well as a chance for communication across functional areas to begin, and relationships and trust to be built. A negative is the same as the face to face meetings: it may be difficult for the credit manager to develop an action plan from the subjective data collected.

A final technique, which is less time driven and more easily tabulated, is to develop an internal customer satisfaction survey. While the survey takes time to develop and write, it is relatively simple to administer. One negative feature is that the survey lacks the personal touch of face-to-face meetings. However, using a survey does not preclude the credit manager from taking the time to meet with internal customers prior to the survey to explain the purpose of the survey and obtain buy-in from the customers. An easy way to obtain this buy-in is to make the customers feel their input is valued and necessary. Customer satisfaction comes from customers feeling important.

The final section in this four part series will look at the actual development of the internal customer satisfaction survey. The information collected is only as good as the questions asked on the survey. It is important to make sure the survey questions get the credit department the information they need to satisfy their customers. Once again, it is also important for the collection agency working for the credit department and its debt collectors be informed of the findings of the internal survey to assure that they are providing the credit department with all the information they need to satisfy the needs of their internal customers.

Collection Agencies And The Internal Customer Satisfaction Survey

Create a customer satisfaction survey for your Internal Customers

The survey should also include questions about the reports distributed by the credit department relating to credit risk and accounts receivable status. Are the internal customers of the credit department receiving the information they need to do their jobs, is the information received in a timely manner, and is the information accurate?

Survey questions about accounts receivable collections should come next. If the credit department has hired collection agencies to assist with debt collections, the performance of the collection agency should be measured here as well as the internal debt collectors. Reports of the status of debt collections should be addressed here also. The content, timeliness and accuracy of the reporting should be included.

When cash remittances are received, this information needs to be sent out to internal customers immediately. Are the cash remittances posted promptly? Are reports relating to cash remittances timely and accurate, and is the information presented in a way that is helpful and informative to the internal customers?
Keeping track of and responding to customer cash discounts and deductions can be a nightmare. The survey should ask if the credit department’s handling of these discounts and deductions is timely and reported in an understandable format. Develop questions to determine if any improvements need to be made in handling or reporting.

Questions relating to how the credit department operates within the organization overall might include questions about the responsiveness to requests for customer credit investigations, timeliness of credit decisions, and supportiveness to the reporting needs of internal customer departments. Tailor these questions to glean the information the credit department needs to make positive changes where needed.

Finally, the survey might include some questions pertaining to the credit department’s knowledge of the industry, the economy or technology as they relate to the credit department’s interactions with its internal customers. For example, it might be helpful for the credit department to know that some of its staff is not well-versed in the technology being used by the company. This might point out the need for further training.

Development of an internal customer satisfaction survey is not simple, but it does not need to be overly complex or lengthy. Determine what your internal customers need and expect from the credit department, and write your questions to glean measurable data about these areas. If your questions are specific enough, the information collected should help you fine-tune your credit department’s operations to be more efficient and provide excellent customer satisfaction to all internal customers.

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