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When the phrase “collections management” comes up in conversation, people that collect art or objects of some kind, think about software to manage their art, music, or whatever collections. Accountants and executives think about collecting money, and managing that process. If you are looking after a collection of objects, then an asset management package is a great tool. If you want to standardize how you collect money, then Collections Management software is the tool for you!
As a former business owner and an accountant, I like the idea of using a tool to do what can be a tedious job. And, I like to automate the job as much as possible. I used Dynamics GP Collections Management. Here are my top five reasons that businesses should be using a tool like collections management.
With any job, there are those things that we like to do and other tasks that we don’t. Sometimes, if we know the people involved, emotions can get in the way of good business practices. Using a software that automatically pulls up the delinquent accounts dis-allows any preferential treatment.
If a company ends up going to court because of a client’s refusal to pay their account, the company will win more easily if they can demonstrate that they have a standard set of collection policies and routines, and that the process does not discriminate based on gender, race, or religion. As a side note, I am amazed how often those who refuse to pay their bills will scream about persecution by a business.
When a client is past due, a standard letter that has been created for a FIRST NOTICE (as an example) can automatically be triggered to send out. These letters can be created as WORD templates and, because Word is such a comfortable product to use, people find it easy to create these standard letters.
A tool needs to be easy to customize and make changes to when a company makes business decisions and changes policy. Sometimes, that involves advising clients that their payment terms will be changing, or that their pricing is changing because of a change in their business volume. While these changes can be handled by the Sales department, my preference is to do it through collections so that there is a record on each account that the client was notified. Again, using a Word document is an easy way to do this.
In the days before automation, when a customer fell behind, someone – usually in accounts receivable – would call the customer and write notes on a piece of paper. The notes might make it into a file or not. If the file was forwarded up the food chain to a Sales Manager or to an Owner, there was not often a record of this event. With the software, a workflow of how the customer file is handled may be set up. All the contact notes are in one place, and may be time stamped. They can be printed out at any time. This record keeping can reinforce the fairness with which the customer has been treated. While many accounting systems do have the ability to add notes to a customer’s account, generally, there is not an easy way to report on this information.
Often, changing the credit limits, or putting a customer into a new pricing level is an emotional decision rather than a quantitative one. “But, they are such good customers!” is the phrase most often heard. With a good collections tool, the total sales, average days to pay, and returns can be calculated in seconds. The Collections Manager can then give a recommendation on whether a customer’s limits should be changed. Again, the process is fair to both the company and to the customer.
All tools have a purpose – to make the life of the individual easier; to accomplish more with less effort. If a collections management system is correctly setup and used, it can help a business lower their outstanding receivables by pinpointing customers who are tardy payers early in the business cycle.
If you are not using Collections Management for GP, and you would like more information on the product, call us at Etelligent. We love to help your business improve its performance.
Judy, ERP Consultant for Etelligent Solutions
Etelligent Solutions - Edmonton, Calgary ERP and CRM
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