Policies and procedures are the building blocks of a well-functioning Accounts Receivable department. They teach employees how tasks should be completed and simplify office operations. But why do experts in the industry see them as a necessity?
“Our industry is one of the most regulated in the country,” says Tina Hanson, executive vice president of State Collection Service in Madison, Wisconsin. “We work every day to follow laws and compliance obligations that sometimes contradict each other. It is imperative that the way you do business is documented to not only demonstrate compliance but also ensure that employees understand the process, the consumer, the client and the resulting regulatory bodies.”
Unfortunately, policies and procedures don’t always get the attention they deserve from ARM professionals. Here are a few ways the internal structure provided by policies and procedures can improve your business as part of a properly-maintained Compliance Management System:
1. Improve day-to-day operations
Policies and procedures can simplify daily operations by providing new employees with a roadmap for how to perform their duties and an explanation of what is expected of them in their roles. These documents can also save time and streamline productivity.
Having an official set of policies and procedures ensures every member of a team will be handling matters the same way. This uniform behavior will keep everyone on track and make the whole office more productive. It can also help you to avoid personnel issues when a problem occurs.
“Before our office implemented many of our policies and procedures, a problem that occurred would be blamed immediately on an employee or client,” says Courtney Reynaud, President and CEO of Creditors Bureau USA. “It’s human nature to need to place blame, but I discovered that many of the problems didn’t have to do with any one person. Most of the time, a problem arose because there was no written policy, procedure or work instruction, or there was a lack of training.”
Provide your company’s policy and procedure manual to your staff, or at least provide access to the portions that pertain to each employee's specific role. Train employees to refer first to the policies and procedures manual before asking management for help on basic questions. This empowers employees to be well-versed in what is expected of them, and it can also cut down on the time management spends answering the same question for multiple staff members.
2. Keep your agency out of trouble
Policies and procedures are integral to avoiding compliance violations. By outlining the correct actions to follow during daily tasks, you create a compliant environment for your employees. This also sets an expectation of compliance within the office, showing the important part it plays in running an Accounts Receivable department.
Of course, another big perk is that policies and procedures ultimately save your agency money. Having and following these rules reduces the likelihood of legal challenges dues to compliance violation, which saves substantial funds that might otherwise be spent on legal fees and fines. In drastic situations, proper policies and procedures can mean the difference between a thriving agency and one that’s forced to close its doors.
How to create your policies and procedures?
Your office may already understand the value of strong policies and procedures. Often, the hardest part is knowing where to start. This insideARM piece discusses the first items your business should consider before creating your system, including what format you’d like to use, who should have access to which documents, and how to organize the information.
If you’d rather have in-depth training on creating your policies and procedures, your ARM team may decide to obtain a Professional Practice Management System (PPMS) certification.
“We did the PPMs training class at ACA in Arizona several years back,” says Reynaud. “Although we aren’t a certified PPMS agency, the tools provided in the PPMS class are extremely useful in our office. Our Policies, Procedures and Work Instructions are based on the PPMS program and I still pull out my training materials every now and then for a refresher.
This program teaches agencies to effectively create and update the rules that govern their office operations. It can reduce mistakes made within the office, promote better communication, and inspire confidence with consumers and potential clients. The program can be customized to fit agencies of any size and can be tailored to address any agency’s specific needs.
ACA International’s Professional Practice Management System ® certification provides the framework for a company to build a compliance system that demonstrates success through proven audits, continuous improvement, tracking of issues and documentation that is current and compliant with the agencies' specific procedures,” says Hanson (who also is chair of the PPMS Committee for the ACA, and a certified PPMS instructor). “It also provides the framework to then insert any other specific certifications (SOC, etc.) to be layered into it without recreating the process.”
What is the ultimate value of the PPMS system according to Hanson? A framework to implement and manage change within your business. “Without the ability to manage and measure what we do and learn to adapt while remaining compliant, we add costs to the bottom line.” It’s safe to say, that’s something no accounts receivable department wants.
For more information: Download our Compliance Management System Guide.