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Customers who are holding up payments because of problems with your product or service are not going to take kindly to routine collection calls. But are your collectors trained and authorized to solve these problems? This company's are, and it helps that they're not even called collectors.
In March of 2010 the DSO at American Alarm and Communications, Inc. was 44. Today the DSO is 28. How was this improvement accomplished? By dropping the Collection Department from the organizational chart.
Sounds a little strange, doesn't it?
Drop your collection department, and improve your DSO by better than 30 percent.
But of course, there's a lot more to it than that. The department became Client Relations and the collectors became client relations specialists. They can call customers any time to see how things are going, and, since most delinquencies stem from issues like incomplete installations, they can nip problems in the bud.
"If I'm calling about a large installation made eight days before to make sure they're happy with the job, and they see that the call is coming from the collections manager, it just doesn't go over well," notes Lori O'Leary-Karl, who was hired as collections manager two years ago and helped persuade the company to make the transition to Client Relations.
Accounting Manager Lisa Davis, who recruited Lori, explains that the company has grown substantially over the past four years, having made several acquisitions. And, as the customer base has grown (there are now 20,000 active accounts), collections got behind.
"We saw that we needed to do something different," she says. "We don't want to wait 90 days to find out that someone is unhappy with our services. So we recognized that we needed to change our approach, speeding up that initial contact. But when we did speed up contacts, we also realized that the customer wasn't happy to be talking to a collector."
The two ladies had worked together for another company years before, and Lisa believed that Lori has just the right customer-service-oriented business philosophy and personality to transition Collections into something more appropriate, what was to become Client Relations.
The transition was complex. Part of it, of course, was selecting and training staff with an emphasis on customer relations rather than hard-nosed collections. Just as demanding was creating an interdepartmental network that would assure that any problems customers have been discovered and addressed immediately.
 What we do is bridge the gap. We've developed a team that catches problems in the early stages, just after the installation, so we're really focusing right from the beginning to the end.
Typically, the installation department gets a job 95 percent or more complete, then "bills the job off." There may be a couple of follow-ups needed to complete the installation. But Installation may assume those will have been handled by Sales or another department, and maybe that doesn't happen.
"What we do is bridge the gap," explains Lori. "We've developed a team that catches problems in the early stages, just after the installation, so we're really focusing right from the beginning to the end. We can involve all departments, pulling everybody together to get the job done promptly and correctly. Collections is certainly a huge priority or course, but we're really customer service focused."
"Seeing Lori's approach, management got excited about it," Lisa recalls, "and obviously the numbers started showing it. She took the initiative to say this is the mission for this group. Management agreed it made sense to do it that way." "Now we can call early in the collection cycle and we can touch on everything," says Lori.
Next Steps: Partnering With Sales & Visiting Accounts
The next step was for Client Relations to start partnering with Sales and visit key accounts to resolve issues in person. The company has a lot of multi-location accounts which leads to billing complexity. "These companies are looking for specifics," Lisa explains, "and our billing system doesn't get to the level of detail they need.
Lori points out that in large-customer companies it's very important that everyone in key positions is made aware of who they should be contacting. "Just because they mentioned something in passing to a salesman doesn't necessarily mean that whatever it is they want - some add-on or cancellation - will be changed. There are communications issues."
The work of the newly designated department also had to be coordinated with the company's Customer Care and Customer Service groups, which didn't object to the name change. "It was just a matter of finding the right title," notes Lisa, "which CFO Lou Sampson approved right away."
Credit management isn't a major responsibility at the company since new clients are required to make 50 percent deposits. Terms are on-receipt, with an unstated net-30 which is when collections start. If the customer is a new contractor they will do some credit investigation, getting a heads up from the local industry credit group.
The variety in the size of accounts is another complication. These range from residential up to large companies and public agencies. "A residential customer will have very different concerns than a government agency," Lisa points out. "We might send someone an annual bill and then learn that they're on a fixed income and will have trouble paying it.
"Rather than disconnect them, we look at how we can keep them. As a company, we are dedicated to our customers' protection. Someone on a fixed income may need monthly billing. In our training, we emphasize that we're providing something our customers need for their safety and security, and our job is making sure they're able to keep it."
The four collectors-turned-client-relations-specialists are more than up for the job. Lori has hired two of them since she joined the company, selecting them for their "people-oriented" attitudes and personalities. Their approach to their work reveals key points in the company's mission statement:
- Seeking a "family-style", caring atmosphere by investing in and building positive long-term relationships with customers, suppliers, competitors, and fellow team members.
- Systematically solving problems by gathering facts, analyzing root causes, and implementing corrective action.
- Using all available information in solving the problem.
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