“A sale is not a sale until the goods are paid for.” Yes, that could be from Credit Management 1.01. It’s trite but true though. And with every major survey suggesting payment terms are increasingly stretched, we asked Colin Thomas of CIFS’ debt collection partner, STA Graydon, why some companies are better than others at getting the money in.
“The key”, says Colin, “is to take action immediately payment terms are (or are about to be) infringed. There’s a direct correlation between the age of debt and collection success rates. Common sense really, but you’d be surprised at the number of debts placed with us that have simply been left to gather dust.”
It’s for this reason that under the terms of our Integrated Collections endorsement, the requirement to send details of outstanding debts to STA is within set timescales.
And we believe collections are likely to become of increasing importance. Businesses are expanding their client bases to generate much-needed sales growth and with more accounts it’s inevitable that collections activity will expand.
Debt collection is the “hard slog” end of the credit management process – especially for low value accounts. We take the view that using a third party debt collection agency like STA has a number of advantages. First is specialist expertise – they’re good at what they do – and in Marilyn Underwood STA have the current Commercial Collector of the Year.
Next is an effective multi-lingual international capability – with more companies seeking to export, chasing overseas debt can be a major source of frustration and wasted resource.
Also, using outside expertise to track down outstanding debts allows credit managers to focus on the evaluation of profitable business and contribute more effectively to the business. It’s perhaps unsurprising, then, that more than 25 per cent of CIFS policyholders have decided to avail themselves of our STA option. To date STA has collected over £3.5 million for CIFS policyholders – and their overall collection rate for us (excluding insolvent debtors) is no less than 71.3 per cent.
Now, for STA it’s a time of change, says Colin Thomas. For example, the company is reaping the benefits of a significant investment in enhanced systems.
“Our ‘Your Debts Online’ web reporting portal is the ultimate in transparency, ” he says. “Aside from progress reports on each and every debt placed, it shows cumulative collection success rates, and provides a breakdown of all costs associated with recovery. This provides return-on-investment data invaluable to credit professionals.”