As a Credit Manager, you need to be prepared to take the actions necessary if your company has acquired another or consolidates and merges another business unit's accounts receivable into your existing AR portfolio.  How will this new workload be handled?  What differences in business practices will you as the Credit Manager, have to understand and deal with?  This is Part Two of “Tips” to help you plan this out for an effective transition.  

1. Meet critical stakeholders. This will include stakeholders in the acquired entity and internally.  For example, set up meetings with the Sales teams, Customer Service, Operations, and other areas where transparency and process integration are essential.

2. Decide how and when to integrate the new portfolio into your system.  The ease of integrating the new portfolio into yours will depend on a number of factors.  Do you have customers in common, or will the new portfolio be new to your department?  Will data come from the same system you are using?  How long will it take to execute a complete transfer of data?  Will the new portfolio be managed as an independent entity on your system? It is likely that the new portfolio was managed on a different collection software than your company currently uses.  If so, to reduce the impact of managing these accounts consider the following:
   • Try to segregate the pre-sale AR from new business.  Set a date for a new business to be uploaded to your system.  Allow enough time for the data transfer to be done accurately.
   • Once the new AR data is populated on your collection software, do what is needed to resolve the pre-sale balances until all items are cleared.  This will keep the focus on past dues, disputed items, and aged dead balances that may lead to an escheatment risk.
   • Keep on top of the status of the third-party collection and legal activities.  If items are pending with a third-party collection agency you are unfamiliar with, review their past results.  Get a detailed status of open claims.  
   • Determine if you want to continue to use the agency.  If the agency's performance is poor, you may consider pulling accounts back, for either in-house collection or be referred to your preferred agency.  You may find there are industry-specific considerations.  If the existing agency specializes in that industry, it may be worth continuing to work with them.

3. Determine the need for additional staff:

• Start with the staffing of the acquired company.  What were the functions served, and how was the staff deployed?  
• What was the transaction volume per FTE for credit approvals, collection accounts/invoices, disputes, and remittance processing? 
• Compare the productivity per FTE with that of your existing staff.  You may be able to predict improvements if you have superior automation and cleaner processes.
• Layout your department's FTE requirements to management in quantified detail.  You may consider bringing the acquired company employees on board if that is possible.  Another approach could be to hire temps until the past due balances are taken care of and a normal ongoing workload per FTE can be more accurately assessed.

4. Integrate the new portfolio.

• Review your credit approval and collection strategies and policies to address any differences in the risk characteristics of the new portfolio.
• Communicate any policy changes to other stakeholders and customers with a need to know.
• Integrate the new portfolio into your system, dashboards, and performance reporting.

Conclusion

If your company is considering an acquisition or consolidation of another business unit, let your management know you need to be on the due diligence team.  If that is not possible, get involved as early as you can.  Understand what steps you will need to take to manage the new AR portfolio effectively. Once you inherit a new AR portfolio take immediate action to organize your department and how it should be staffed.  Communicate with other stakeholders who your department depends on and who will depend on the performance of your department for the transition to be a success.  This “Tip” Part One and Two are thought starters for your action list.