The Collections Work Load
A highly productive collections department is one that collects a high percentage of funds overdue from its customers, and within a reasonable period of time.
It is not easy for the collections staff to accomplish this task when collectors are also responsible for the following items that do not directly result in the collection of cash:
- Discovering which customer payments are overdue
- Researching customer contact information
- Finding customer files in storage
- Mailing late notices
- Tracking promised payments
None of these items directly result in the receipt of cash. Only direct interaction with customers will achieve cash collection in most cases. All of the other tasks just noted are essentially administrative. Thus, it is apparent that a large part of the time spent by the collections staff is not related to the receipt of cash, which makes them less effective. A less effective collections department requires additional staff to ensure that all collection contacts are made, which makes the department less cost-effective.
Add Administrative Staff
An excellent way to improve the effectiveness of the collections staff is to shift all non-contact activities to an administrative staff. This has the following benefits:
- The collections staff can contact more customers, and more frequently
- The administrative staff that supports them is less expensive
- Since collections increase and there is a better mix of lower-cost and higher-cost staff, the cost-effectiveness of the department rises
To take the concept further, try to keep the collections staff away from all departmental or company functions, such as meetings, unless they are absolutely necessary. And if an event is considered mandatory, then schedule it outside of the primary calling hours of the collections staff.
Centering all activities in the collections department on those employees who contact customers will only work if the collections manager realizes that an experienced and productive collections person is a prized asset whose time must be reserved for collections - and nothing else. In essence, the bottleneck in the collections department is the collectors, so try to keep them focused on the main activity of the department.