Although JSP Credit Management is a relatively young company. It is the culmination of over 15 years of experience of working with a wide variety of different companies, in a variety of different industries and has been shaped by a way of working throughout that time which has demanded continuous improvement.
Fortunately for us, were involved in an extremely measurable industry, because we work with money, or numbers, which can be measured very objectively. Having a positive subjective experience is also very important in any job you choose to do but we have found it is also useful to have some key performance indicators we can use to objectively measure how things are going.
Some of the ways we have measured our performance in credit management over the years are:
· Total cash collection figure for the day/week/month/year
· % of cash collected against amount billed
· Month on month comparisons in cash collected
· Month on month average debtor days (or DSO)
· The total value of debt in dispute
· The average time taken to resolve a dispute
· % of 90+ day debt
· Amount of 90+ day debt
· Value of write-offs by month and year
· Monthly and yearly write-off amounts
That is far from an exhaustive list and represents an insight into the almost endless ways that we as credit management professionals can use the figures we work with to measure our performance in our roles as credit controllers, credit managers, credit analysts, credit control supervisors or any other roles involved in the accounts receivables department of a company.
We're huge advocates of measuring our performance here at JSP Credit Management. It's not enough just to have a quick think about how we might be doing without any evidence to back it up, as there are all kinds of psychological problems associated with that approach. We all have ego’s and sometimes our ego’s will protect us from the emotions which might follow an acknowledgement were not actually doing as well as thought.
But we feel that moment is less of a threat to our emotional wellbeing, and more of an opportunity for growth. Yes, it's painful to realise that things are not going as well as hoped, or as well as the previous month. But from that position, we are then able to delve even further into what the possible causes for that are and address them head-on rather than being oblivious to them because we think that things are not going too badly because we have not had any grief from the Managing Director or Finance Director and were near the end of the month.
So, we decided to share just a couple of things that we have found to be important when trying to meet our targets for the month. Some of you may not have targets imposed upon you by the company that you work for but you may be one of those “self-motivated” people who have personal targets that you would like to meet for yourself. As someone on the front line in collections, we know there is nobody in your company who will have the intimate knowledge of your ledger that you have.
Our big reveal is quite an anti-climax, if you are waiting for an absolutely mind-shattering revelation that is going to crack the secrets of the universe that is. However we have found in over 15 years, many companies, several industries, billions in cash collected that the single biggest thing that a credit management professional can do to transform their cash collection figures is get the billing process right.
Time and time, and time again, we would hear that payment was not forthcoming because they either did not have the invoice, or it did not have a PO number on it, or it was addressed to the wrong legal entity. To us, these are simple wins. Invest some time before billing ensuring that your billing process is according to your customer's requirements and you will make more of a difference than the next two things combined. That’s our prediction.
The next point which we are big advocates of here at JSP Credit Management is sort of a contradiction to one of the things that we see on almost every credit controller job vacancy. It often says something like “Ability to influence”, “have strong negotiation skills”, or “have a persuasive telephone manner”. For us it is not about having a persuasive telephone manner, it is about being organised and disciplined.
Owing to our background in psychology the next one has got less to do with a practical step which we are urging you to take to help you get to where you want to be (which is being the best collector in your company, surely?). It is more to do with an approach or a philosophy which in our experience has helped us achieve things that even by our own assessment looked unlikely at the start.
If you are the head of a credit control department and are looking to transform your cash collection figures, then focus on the wellbeing of your collectors. In one of our roles previously we were asked to take on the role of a wellbeing ambassador within the billing department of a very large company that we worked for. A role that we were more than happy to take on because if there is one thing we understand more than anything, it is that we are human. We are not robots.
Do not just dismiss that if you think you have already got that covered. Ask your collectors to do an anonymous feedback form on their experience of working there. Any company can get a “stress at work policy” template off the internet and say that they care about employee wellbeing whilst at the same time constantly pushing them to achieve unrealistic targets, constantly redefining their job role to meet constantly changing business priorities, and overloading them with work causing them to need to do overtime just to stay afloat.
A credit management professional who feels valued, who feels motivated to come to work and give their all will collect much more than somebody who feels drained before they have even got to lunchtime. That is just common sense but check out Google Scholar if you need some evidence to back it up, you will not have a problem finding peer-review research on the relationship between employee wellbeing, motivation and productivity. This is a point not to be understated.
And there you have it. Our top 3 tips for transforming your cash collection figures. Try them, we dare you. Of course, we're not suggesting these are the only things which need to be taken into consideration but our experience has shown us that these three changes have the potential to produce significant improvements in month/quarter and year-end figures when it comes to cash collection. If you want to discuss what else you can do then get in touch.
We are here to do a bit to businesses safeguard their cash flow against late payers or debtors that are refusing to pay, so if you have been struggling to get an invoice paid and would appreciate the support of a team who pride themselves on operating in a way that is mindful of the above then visit our website at www.jspcreditmanagement.co.uk and contact us to discuss your needs. We operate on a no-win-no-fee basis for bad debt recovery and our credit control and credit risk services can be ordered via our website with the littlest of hassle.