Credit, Collection, Chargeback and Cash Application Management

Another Example of AR Management Done Badly

Brad Wentzel — Thu, 18 Feb 2010 05:21:31 +0000

In previous editions of AR Gone Wrong, I introduced and coined the term “Collection Loops.” A Collection Loop is what happens when a company outsources a portion of their “straightforward and simple” collections to another firm. The company provides limited information that basically includes the amount of money to collect, when it was due, who to collect it from and systems that are designed to assure that the debtors are Dunned efficiently. Part of this efficient collection process is to assure that no one falls through the cracks. They receive a call, letter or email every couple of days until the pay.

In the two previous real-life examples of AR Management gone badly, the Collection Loops were easily broken via one fax to the loop creator’s CEO.

Cforia changed from a traditional telecomm provider to VOIP during September 2009. This technology upgrade was a part of our European Sales and Support Office opening. VOIP allows our European Office to easily communicate with everyone else in the company. All Cforia employees are a simple 4-digit telephone extension away from each other. I always have problems with do I need to dial a 9 first and then 011, or is that + first.

In preparation for this technology change-over, we built out the new telecomm facility and started running it in parallel a month and a half before the anniversary date of our contract with the traditional telecomm provider. Parallel systems allow verification that everything is working correctly before pulling the plug on the old provider.

On July 16th, 2009, we contacted our old telecomm supplier to inquire about providing notice that we did not intend to continue our plan through auto renewal on the forth coming anniversary date, September 23. Their call center suggested that we call them 30 days before the 23rd to “formally” let them know that we are terminating their service.

On August the 23rd, I contacted their call center and gave them verbal notice that Cforia is electing to terminate their service effective September 23rd. As a safeguard for Cforia, I asked the call center for their fax number so that I could document that we had given appropriate notice.

Since September, Cforia has received three monthly bills for continuation of service, even though we have stop using them and had requested termination. During November we starting receiving threatening disconnection notices for non-payment. Our AP department tried calling their Call Center and were told that they could not shut off the billing.

Our former telecomm provider has taken the concept of Collection Loops to a whole new level. They have managed to setup a “Billing and Collection Loop.”

During January, Cforia AP placed the latest threatening bill on my desk with a sticky note that asked me go after them with my standard CEO notification process. My standard CEO process consists of faxing a company CEO that seems to be stuck in a loop the details. Funny how someone who reports to the CEO is able to break through corporate bureacracy and fix problems quickly.

This particular telecomm company seems to have a fairly open door to the CEO. I actually reached his voicemail on the first call, told him that I was faxing him a one page letter that describes the delimma his company has placed us in. Surprising, my call and fax were not responded to over a five day period. I personally have been using my CEO Process for around 25 years, and five days is easily the all time slow response.

After five days, I called and got through to the CEO’s Admin. She told me that it had taken a couple of days for the fax to get to the CEO and that she had routed the problem to a corporate troubleshooter who was assigned to fix the problem. I was forwarded and handed off to the “Troubleshooter”. She was able to go on line and see a July 16th note that said Cforia wanted to terminate at the end of term. She assured me that the bill would be written off and that we would not be bothered further. “It should only take a couple of days.” I asked for an email confirmation when she was sure everythign was taken care of.

Of course I never received that confirmation email, and right now I am pondering whether I should have punctuated that quotation with a period or a question mark. Last week Cforia received the nastiest Dunning notice yet, “Because you have not paid your bill for several months, we are going to disconnect your service and since you have breached your contract, you owe us a year’s service fee.”

Cforia is just fine with them disconnecting our service, especially since we stopped using them almost five months ago. The part we disagree with is that we do not want them placing adverse comments in our credit records.

On Tuesday, February 23rd, Cforia in honor of Hugs and Kisses Communications is presenting a webinar on Outsourcer, Shared Services and BPO Best Practices. You can register at the link below.

http://www.cforia.com/contact_forms/outsourcer_shared_services_and_BPO_best_practices_webinar.html

This should be a really fun webinar that dissects some really crazy worst practices that are unfortunately much too common. Much to my surprise, I have received more feedback from people who work at Cforia than any other webinar that we have ever done. Comments like, Sounds Interesting! This is totally new stuff. How dare you put something so controversial out there for everyone to see.

I would love seeing any comments about others who have found themselves trapped in a “Collections Loop”.

Are your customers stuck in a “collection loop” ?

Brad Wentzel — Fri, 09 Oct 2009 00:12:59 +0000

My manager recently asked me to deal with a Cforia supplier issue that he was stymied with. He seemed to be stuck in a loop where he received a Dunning call or email every two to three days over the past fourteen months.

Here are the facts behind how this loop was created. During May of 2008, he noticed that our monthly bill to a data archival service was growing bigger every month. After inquirying the data archival service, he learned that the data archival company was storing and charging us for every single backup media that they had ever picked up from us. My manager requested that the archival return all backup media older than two months.

The July 2008 bill from this provider was for the same amount that was billed in May. My Manager refused to pay the bill until he received documentation from the provider that showed when the unneeded archive materials had been returned. Every couple of days, he received a Dunning call from their “collections department”. The call went the same every time, my boss asked for a copy of the storage records to determine the extra archived materials had been returned. A few days later he received another call, from another collector, who did not seem to know anything about the previous call and that a dispute had been raised.

My standard operating procedure for this type of situation is to send a simple one page fax to the CEO of the company, which simply explained the situation and asks for his help in resolving the impasse. This vendor seemed to have a particularily open door policy, because I was directed to the CEO’s voicemail and received the name of his Admin on the first call. Some companies try to protect their CEO’s from bad news, while others want to hear about it. This company was the second type.

The next morning I received a call from the CEO’s Admin, who immediately handed me off to the Director of the AR Department. During the first call with the AR Director, she admitted that they seem to have a problem with Disputed Items ending up stuck in a collections loop. She confirmed that the outsourced some of the simpler collection activities, and in order to protect the privacy of their customers, they only synchronize some of their data to the outsourcer.

This is the loop that was created; you provide a list of customer information and the amount to be collected to a group that is tasked only to collect. This group gets setup to call or email until the amount has been collected or they receive directions to stop calling. This system has a built in tickler that reminds the collection partner to call or write every couple of days. The collection partner is not provided with an ability to escalate a dispute they uncover and suspend the reminder from telling them to call. To add insult to injury, sometimes outsourcing contracts get set up to pay for the number of collection calls or letters sent, rather than the result.

The Director was able to have the Local Branch Manager contact us. The Branch Manager complied with our request for an accounting of the when the media were drawn down through a report that she provided. It turned out that we had not received the excess media back in house during the July 2008 Billing Cycle. This time, the Dispute turned out to work in the suppliers favor. Cforia promptly paid the July 2008 upon receiving the proper documentation.

This type of situation can be averted by several fairly simple system changes. Provide your outsource partners with a system or demand that they have a system that is capable of escalating disputes back to the correct stake holder at your company. Your outsource partner must have a means to capture notes about the nature of the dispute, so that the escalation person can pick up where the oursource collector left off. Customers hate to have to give the same information again and again. This will leave your customer feeling that they are not being listened to, and we know what happens to customers who do not feel listened to.

Finally, avoid writing a contract that pays by the call. When you write a contract that pays by the call, you get lots of calls.

This month Cforia will be presenting a webinar on SAP AR Lean Six Sigma. This information applies whatever your ERP system is. Registration Link for SAP AR Lean Six Sigma Webinar

This webinar is complimentary and may help your company prevent getting your customers stuck in a “Collection Loop”. This will be good for your customer’s well being and your company’s profitability.

Cforia Completes All-Time Record Quarter ending September 30, 2009

Brad Wentzel — Mon, 05 Oct 2009 22:00:51 +0000

Press Release

Cforia Software Completes All Time Record Quarter.

Westlake Village, CA, USA – October 1, 2009

Cforia Software, the leading provider of Credit, Collections, Chargeback and Cash Application Accounts Receivable
Automation Software, today announced an all-time record revenue for the quarter ending September 30.

The following large corporate customers signed during the quarter:

Henry Schein, Inc.
Maintenance Supply Headquarters
Ball Corporation
Hamilton Beach
Olympus America

Quoting Mr. Dave McIntyre, Cforia’s CEO, “Cforia has been very successful in demonstrating that we are able to help
corporations obtain the best financial results possible despite the current economic downturn.

We are seeing continued acceleration in net new customers from competitive platforms. Cforia is a case study in organic growth via new customer acquisition rather than our competitors’ strategy of business acquisition and of farming their existing customers for upgrade transaction fees.

Cforia customers recognize our commitment to their success by delivering tailored implementations including multi-ERP, currency and country consolidations. The Cforia solution uniquely delivers the best cost benefit ratio compared to other AR Automation vendors, ERP collection modules and certainly in-house development or BI tools.”

About Cforia www.cforia.com Cforia Software, Inc. (Cash Flow Optimized, Real-time Information Access) develops solutions that enhance cash flow management. Cforia’s software products extend the functionality of accounting systems like SAP, Oracle, PeopleSoft and JD Edwards. Cforia’s customers are found in North America and Europe.

Cforia Webinar August 26: Interdepartmental Collaboration for SAP Credit, Collections and Chargeback Management

Brad Wentzel — Thu, 20 Aug 2009 00:43:25 +0000

Learn how to increase collaboration and facilitate teamwork to resolve problems that must be handled outside your Accounts Receivables department.

Click here to register.

Most SAP implementations do not provide a means to manage Credit, Collections and Chargebacks across the enterprise. Accounts Receivables is a customer facing role that can be leveraged to increase customer satisfaction, and gather data that supports lean six sigma quality initiatives.

Join us on Wednesday, August 26th, as Cforia Software shares a business improvement process that will help your company facilitate its receivables collaboration.

Attend this webinar to learn methods for and benefits of maximizing collaboration between AR and other departments.

Provide a means for collectors to change roles the second
they hear that a customer is not paying “because”.

Escalate problems to outside stake holders.
Assure that delegated issues are resolved.
Use root-cause analysis to avoid preventable chargebacks
through process change.
Effective use of metrics to drive positive changes.
Improve Business Process Outsourcer (BPO) customer
service and problem resolution.

A practical demonstration will show how Automation Tools can help your receivables department reach increased levels of collaboration.

Cforia Webinar August 19: Automatic Credit & Collections Management to Avoid Bad Debt

Brad Wentzel — Mon, 17 Aug 2009 23:54:29 +0000

In these challenging economic times Accounts Receivable departments assume the delicate role of identifying struggling customers, policing exposure and making quick and often difficult order release decisions.

Click Here to Register

Better Credit management can:

Improve Credit Hold and Order Release
Automate Credit Scoring and Reporting
Multiply productivity of your AR staff
Increase cash flow and reduce bad debt

Join us on Wednesday, August 19 as Cforia Software provides a business improvment process that will increase the effectiveness of your department’s credit management.

Attend this webinar to learn how enhanced credit management workflows will immediately improve your AR performance:

Automatically calculate Days Beyond Terms for every custmer.
Monitor DBT trends and consumption of credit limit to anticipate rather than react to bad debt.
Leverage intelligent credit hold and held order release workflows.
Automate letters, email and faxes to touch more customers.
Decrease DSO by 10 – 20% in 90 days.
Use separate Collections and Chargeback tracking to increase departmental productivity.

Bad AR Automation Increases DSO and Decreases Customers

Brad Wentzel — Thu, 06 Aug 2009 00:59:39 +0000

For today’s posting I will start by recanting a recent personal credit card company customer disaster and end by explaining how a few simple automation changes could have prevented this fiasco.

On May 24, 2009, I signed up to autopay my gasoline credit card. Almost immediately after hitting the send button, I received a transaction comfirmation that acknowledged and thanked me for signing up for autodraft.

My teenager greeted me when walking in the door after a 60 hour week on Friday, July 10th with notice that he had received numerous weird automatted telephone calls from a credit card company about not paying my bill. What’s the matter Dad, “I have heard about having to get power of attorney to take care of your elderly parents affairs, but I was at least hoping this wouldn’t happen until I graduated from high school.”

Moments later my telephone rang again with the auto dialer again. The automatted announcement informed me that we are calling because you are a dead beat and did not pay your credit card bill. Please press one to speak with somebody about this.

I pressed one and after a fairly long wait to speak to someone who had urgently been trying to reach me all day, informed me that I had missed my gasoline card payment that was due on June 16th.

My response, “This is due to no oversight on my own. I am signed up for auto payment.” By then I was already logged into my email and recanted that I had indeed signed up for auto payment on May 24th and still have the confirmation.

The Collector Responded, “The auto payment does not become effective until the second billing cycle and June 16th had only been the first.”

By then I had already logged into the card’s online statement and learned that my account had been accessed a $39 “late fee” plus a little over six dollars interest.” I suggested as a resolution to pay the balance in full manually, but wanted the Collector agree to reverse the late fee and interest charge. “After all, I had done my job. I authorized your company to draw the funds directly from my checking account, exactly to avoid not paying on time. The confirmation needs to state, the auto payment transaction you just authorized does not kick in until the second billing cycle.”

The Collector assured me that she would send a note to a supervisor about the extenuating circumstances and request a reversal of the fees.

I immediately scheduled a manual payment from my checking account to go out as soon as possible, which was the next working day Monday.

Walking in the door on July 14th, my teenager greeted me with, “They kept calling again today.”

About that time, ring, ring, this is your automatted credit card dialer calling again. I picked up the call and after about a ten minute wait to speak to a Collector who had such an urgent need to reach me again, she told me that I had not paid my previous month’s bill. It was as if the previous conversation had not occured.

I logged into my bank account and verified that I had sent the funds to the credit card company on Monday. Logging into the credit card company’s website surprisingly told me that they already showed my payment in full had alreadybeen received. To add insult to injury, the statement still listed the late fee and interest charges. After letting a few choice words rip, the Collector hung up on me.

I decided to see if I could break the loop that I seemed to be caught in by calling the number on the back of the card. This time I reached a US based call center. After speaking to a front line worker about my situation, and being informed that she did not have authority to break a computer loop and reverse the fees, I asked to speak to her supervisor.

The supervisor was both very apologetic about the whole situation, and also agreed that I should not have to pay the fees, which she promptly reversed.

This entire story and the customer service problems are not a people problem. It is a computer systems problem. A few simple AR Automation Capabilities, which Cforia can supply, can fix everything.

Problem 1 was the automatted dialer working on a fixed schedule and does what it is told to do, Dial and Dial and Dial, until the money is received. During my first call with the Collector, I offered to make the payment in it’s entirety in exchange for them getting rid of the fees.

Cforia Software allows our customers to make this sort of transactions with their customers. It is called a Promise-To-Pay Transaction (PTP). One of the main features of a robust PTP, is that the PTP allows a Collector to crank the tickler system to enough days in the future to allow the promise money to physically get to them. Calling me on Tuesday for a promise made on the previous Friday evening is a little excessive. (I wonder if the state agencies that regulate this sort of thing would have to say about it.}

Problem 2 was that the credit card company had outsourced their collections without granting sufficient authority or providing a way to escalate problems that they cannot handle. Collections becomes a Customer Service and Quality job the second that one of your customers tells you the reason that they are not making the payment is because (fill in the blank).

Our system provides the ability to escalate problems to someone else who has authority to do something about it. Basically all this call center was authorized to do is bother people until they pay.

Problem 3 was that the offshore call center was operating off of a AR Automation database that is not real-time. It is probably a batch update system that synchronizes every night during the wee hours of the morning. That is how I was able to see my payment had been made, while the call center was still flying blind.

Cforia Software is the only company in the Accounts Receivable Automation marketplace who offers real-time data synchronization. Doesn’t it make sense not bothering your customers who have already paid? I bet credit regulatory agencies agree. Their collectors could also bring in more money, if they spent their time calling people who have not paid their bill?

Recapping:
- Robust Promise-To-Pay Transaction.
- Problem escalation and collaboration capability.
- Real-Time data when collecting.

As follow up I have reached out to the credit card company to let them know about their broken process and how Cforia can help them fix it.

Cforia Webinar July 23rd: Improve SAP Accounts Receivable Visibility

Brad Wentzel — Mon, 20 Jul 2009 23:01:47 +0000

Learn how to increase visibility of your company’s accounts receivables.

Most SAP implementations do not provide the proper visibility and financial controls to manage it’s largest balance sheet asset, accounts receivable..

Join us on Thursday, July 23rd, as Cforia Software shares a business improvement process that will help your company improve its receivables visibility. This will allow your company to implement improved Accounts Receivable workflow.

Attend this webinar to learn the benefits of maximizing visibility into your AR protfolio.

* Know exactly how many calls, letter and key performance metrics of every Collector in your
organization.
* Create an audit trail that tracks customer’s payment history and trends to avoid bad debt.
* Track customer’s AR metrics and measurements through a Management Dashboard.
* Use root-cause analysis to prevent unauthorized chargebacks.
* Streamline end of month Cash Forecasting so that it is completed in minutes, without manual
spreadsheets.
* Enhance visibility into how your Business Process Outsourcer (BPO) is handling your account.

A practical demonstration will show how Automation Tools can help your receivables department reach increased levels of visibility.

Click here to view abstract and register for the webinar.

Cforia Webinar July 22, 2009 – Credit, Collections and Chargeback Automation Project Planning

Brad Wentzel — Thu, 16 Jul 2009 18:31:13 +0000

Learn how to increase your Credit Department's value through automation and process improvement.

Many companies are looking for answers to help them adapt to the current economic environment. Your customers are requiring more contact to pay on time, while your management is requesting reduced head count and better cash forecast reporting.

Join Cforia on Wednesday, July 22nd, as they along with Quote to Cash Solutions (Q2C) present a credit, collections and chargeback automation project planning template that will maximize cash flow and improve customer satisfaction through improving Accounts Receivables Departmental productivity.

Attend this webinar to lean how to create a successful project plan to automate Credit, Collections & Chargebacks.

* How to determine what is ripe for automation in "Your" company.
* Deciding the best approach and calculating "ROI".
* Effective implementation.
* The advantages of:
- Process integration.
- Credit scoring.
- Automating the collectios and dispute management process.
* A checklist of accounts receivable automation tools.

The formal presentation will be followed by an open Question and Answer session.

Click here to view abstract and register for the webinar.