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The Importance of a Documented Collection Procedure
By By Declan Flood, Founder and Chief Executive of Irish Credit Management Training
Jun 24, 2014

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To be successful at anything you need a clearly written roadmap to bring you from where you are to where you want to go. This is also true for your collections procedures. Collecting the money you are owed should not be an accident of selling, you must set out clearly what is acceptable and what is not, and set out benchmarks along the way to make sure you are on track.

Every company is different; every company has its own way of doing business; every company has a number of balances that has to be collected every month, this article will give you some suggestions on how you could bring in a number of factors to ensure the timely collection of all your outstanding balances.

Firstly, you need to set out clearly for each and every customer the exact date the payment is due.

Is it 30 days from date of invoice?

Last day of the month following invoice?

The 28th day of the month following invoice?

The 7th day of the month following invoice?

Whatever your agreed terms, and you should always look to give as short a period as you can consistent with the strength of your customers and the terms in your market. Make sure these terms are clearly assigned to every balance.

Secondly you should have a payment method assigned to every customer. Will the money be collected by:

The rep when they call the next time? If so enter the next call date as the payment expected date and manage by exception

Direct Debit? Make sure your direct debit customers are clearly identifiable and the total balance is zero after your Direct Debit run.

The Credit Controller assigned to the account? if so make sure they log a call date for every customer they are responsible for.

We are often asked how many calls should a Credit Controller make in a day, and you can imagine this is as long as a piece of string, in a call centre environment 20 – 30 calls an hour could be possible, where there is more issues to resolve and more prolonged discussions around payment you could manage 30 calls a day. Remember it is the quality of the results that counts and not simply the number of calls that is important.

Whatever number you are achieving, relate the number of calls to the number of balances. Say your Credit Controller is making 25 calls a day, there is an average of twenty working days in a month. If you have 800 balances, around 150 payments will come in without a call and you will do around 500 calls in the month, using this example there will be 150 accounts you will not get to this month, so you need to introduce a new system either letters, faxes, emails or text messages for the accounts you are not going to get to call.

Decide at the start, the role is about getting as much money as you can as quickly as you can, and if this is the case you must focus on your largest balances and work down:

Call your top 20 or 30 accounts in advance of the due date

Call the remaining 20% of customers in the first week

Send out your Statements on the first working day of every month.

Schedule the rest of your calls for the coming weeks.

Set out a letter date, an email date for the remaining balances

Communicate clearly with your reps, get their call sheets, and tell them the exact amount they should collect from whom and when, simply posting complex aged debtor reports to reps is a mistake, and the mistake is if you think they understand them!

Working together as a team to ensure profitable sales that are paid for in a timely manner should be the aim of every business and your credit department can make this happen.

Finally, no matter how good your collection methods are, they have to be changed constantly for the customers you have to call repeatedly month after month, otherwise they will learn how to play the game to take advantage of whatever extended credit is available.

Declan Flood
Chief Executive
Irish Credit Management Training
121 Lower Baggot Street
Dublin 2

M: 087 2447052
P:  01 659 9466
F:  01 659 9401


Declan Flood FIICM, Founder and Chief Executive of Irish Credit Management Training is a, renowned trainer, international speaker and author with over 20 years hands on experience in Credit Control and Credit Management with major Irish & International Companies.

He is a graduate of the IICM Education program and a Qualified Business Coach. He received his Qualification in Training & Development from National University of Ireland. He has been training in all aspects of credit management for many years, generating a sense of enthusiasm and urgency that has been experienced by all who have been through the training experience.

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