One of the very first things parents teach their kids is the alphabet. Many of us learned our ABCs before we learned how to walk. What might our parents say today if they were to teach us accounts receivable management like they taught us the ABCs? Here are 26 things they might tell us.
A is for adaptation. In today’s cut throat business environment, ARM executives must possess a combination of collection skill and market knowledge, and have the ability to adapt to changes in the economy, the regulators, the clients and the company.
B is for batch-track performance. Those agencies collection law firms not ranking at the higher end of performance are constantly at risk of losing market share or entire business streams to those who are.
C is for compliance. Compliance now trumps net-back as the most important performance indicator for agencies in the eyes of most credit grantors.
D is for diligence. Whether you are buying a business or on-boarding a new client or staff member, the proper level of reverse diligence is critical to achieving successful results.
E is for education. It is critical to continuously educate and re-educate all levels of staff to be able to adapt to the dynamic collection environment.
F is for financial controls. Key indicators of strong financial performance include sustainable revenue performance, being able to maintain appropriate financial ratios and having a thorough understanding of profitability by client and service offering.
G is for governance. Maintaining governance throughout the entire collections operation is critical to upholding compliance requirements.
H is for humor. We all experience challenges in business. Having a sense of humor helps all stakeholders get through the rough spots.
I is for integrity. If you don’t operate with integrity then nothing else matters.
J is for journey. Business is not a sprint. It is a long-term marathon that will come at you in stages. It might take months or years to feel the impact of decisions being made today.
K is for knowledge. Always operate in the know when it comes to making decisions regarding technology advancement, staff changes and onboarding new clients.
L is for leadership. Leadership starts at the top and permeates through the entire operation. Always operate as if your actions are being scrutinized because they are.
M is for media. From the press to social media forces, the media is all around us. Understanding the power of the media, and how to use it to one’s advantage, is a major distinguishing characteristic of today’s collection operation.
N is for NOI. Collection agencies are not charitable organizations. They are businesses that should be run to generate a healthy profit margin. Question taking on “loss leaders” and be sure to operate lean of burdensome overhead at all times.
O is for opportunities. The key to success is being able to recognize opportunities and being in position to capitalize on opportunity when it is presented.
P is for placement volumes. Regardless of client type, position your agency for increased placement volumes through strong performance and diversification of service offerings.
Q is for quality controls. Strong controls must be in place and adhered to at all times.
R is for revenue cycle management. Agencies are moving up the food chain into earlier stage recovery services to position for profitable growth and secure long-term client engagements. Revenue cycle management is most prevalent in the healthcare sector and starting to emerge in other markets.
S is for service offerings. Agencies are seeking to broaden service offerings and adapt to client demands. The old adage that we do things now because “that’s the way that we always did things” is fast becoming a way of the past.
T is for transparency. More and more ARM companies are operating in an environment where clients and staff members are in the know.
U is for universal tolerance across all of operations for compliance and following the rules.
V is for victories. Celebrate the victories. Business is a marathon and not a sprint. Acknowledge achievements along the way.
W is for workload. Management and staff benefit from a manageable workload and a healthy balance between our work responsibilities and personal lives.
X is for exercise. Exercise the body and the mind regularly. Within the business we must exercise proper controls at all times.
Y is for the young. Having the endurance to run a collection operation is challenging. Keep staff young-at-heart so they can maximize performance and adapt to change, at any age.
Z is for zookeeper. Keep stakeholders from harms’ way and isolate danger at all times. Zoos are beautiful and peaceful until an animal breaks loose.
I recently presented in Miami at the International Association of Commercial Collections. During this conference, I realized that regardless of sector focus, the stage of delinquency serviced, geographic location or the size of the company, we are all confronted with challenges and opportunities and we must be able to adapt quickly as significant forces continue to converge upon the industry. Knowing our ABCs will help us.