Scoring Your Current Receivables: Confidence in a Consistent Approach

Written by Jeff Fluty. July 22, 2011

When I was a child, my parents hoped that my brothers and I would learn to play the piano. It's fair to say they did more than hope. They bought a piano and enrolled us in lessons with an amazingly patient retiree down the street. My mother had dreams of concert recitals and packed audiences. My dad was just hoping we'd turn a dubious purchase (the piano) into a reasonable investment. He's always been the practical one. It was this same practicality that made sure we were chained to the white behemoth for daily practice and never missed a lesson. In fact, on those days we were late, we stayed the exact amount after to make up the lost minutes. A policy which, had it not been in place, would have resulted in me showing up late and later to lessons I grew to enjoy less and less.

Eventually, we all came to some realizations. Sadly, the Fluty boys were not meant for Carnegie Hall. Training and dedication will only get you so far in the arts, and without passion, the ceiling is low. However, my parents are always quick to point out that had we not given it a legitimate effort, we'd always be left wondering what could have been. If you are consistent in your approach, you'll achieve more consistent results. Maybe not always the results you originally desired, but at least you'll feel confident about what you do get out of it.

I know it may be a stretch, but if you're looking for a comparison between this anecdote and credit and collection policies, perhaps it simply has to do with makeing sure you're consistent in your own due diligence.

I recently spoke with a client of mine in the wholesale distribution industry. She was lamenting the state of her slipping DSO. She was the first to admit her woes could be directly related to letting previously solid customers slide. The old adage about it being more costly to find a new customer than to keep an existing one has probably played a big factor in this line of thinking. Many of the companies struggling today will recover and the thought of a strong and lasting relationship sounds a lot better than trying to win back a jilted, former customer. To add to this already complicated situation, many credit and collections professionals are unwittingly creating their own problems through inconsistent handling of delinquent customers. If a limited customer base and crowded marketplace leaves you feeling handcuffed when it comes to a firm approach to delinquencies, it doesn't have to.

I strongly urged this client of mine, and anyone else finding themselves with similar challenges, to consider an additional steop to provide more consistency in their handling of delinquent customers. For some time now, we've encouraged our clients to allow us to score their current receivables in addition to those past due. The results we return include payment history, credit scores, and trending information that could make a huge difference as to whether it's more time that's given or an ultimatum. The process does not impact your customer base in any way and simply provides another critical piece of information to help you make more sound decisions.

If you're interested in a complimentary review of your current or older commercial receivables, reach out to Brown & Joseph today. You might not always be happy with the results, but at least you'll know you've been proactive in seeking them out.

(Also, if anyone is interested in a barely used, 30 year old white paino, I may know a guy.)

To contact the author of this article:

Jeff Fluty
VP Business Development
Brown & Joseph,Ltd
Phone: (214) 295-8824
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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