June 21st, 2024

Why Collections?

Understanding Collections

Product Director Mike Burns explains the basics of collections. First of all, cash application is all about matching incoming customer payments with customer invoices and then trying to automate that as much as possible so that it correlates and they match. Therefore, we can close out the invoices in Cashbook and correspondingly close out the invoices in the customer’s ERP. However, if we look at the reason why those incoming payments are coming in, it’s generally because the collections department at a company is effectively communicating with customers. They are letting them know all their details like their payment terms, what their credit limit is etc.

The Collections Team

The responsibility lies with the collections team to resolve any issues that customers are having. There can be a multitude of reasons why a customer is either going to delay their payment or not send payment in at all until they get certain issues resolved. Therefore, what collections is really all about is providing collectors with a snapshot of every customer’s main information and details relating to that customer. Details such as a customer’s credit limit, payment terms, the last payment amount and the last payment date. They can review collection notes to see the historical problems this customer has had with the goods and services provided. This allows them to effectively communicate with the customer so they can help resolve any issues that come up.

There are many potential issues. For example, a sales representative might have promised X, Y and Z to a customer but when they got their order invoiced and shipped, it only had X and Y. The customer is not going to pay because they were promised that extra item – Z which is not there. Or maybe the product got damaged during shipment. It could be the case that the customer was enticed to make an order because the sales representative promised a promotion if they did it by a certain date but when they got the invoice, that discount wasn’t on the invoice. In conclusion, there are many reasons why a customer doesn’t pay an invoice. This results in a collector reaching out to a customer because they have a tool like Cashbook.

How Cashbook Helps

Within the Cashbook solution, the collector has many features that can help them resolve the situation. The user can sort by total due and see a customer’s aging bucket. They can see anything in the 1-30 overdue bucket or the 31-60 and so on. They can bubble up these problem accounts. Customers call in and the collector can do a search and find the customer that they’re looking for. Once they find the customer, they can see all the necessary information.

They can delve into the invoices and they can see what’s on the account. For example, on Cashbook you might notice a customer still owes an invoice from last July. This is an example of a great account for a collector to call and figure out why they have not paid it and what the collector can do to facilitate it. Once they find out the problems, they can use Cashbook Collections to enter those notes into the system. There may be a workflow situation – for example the customer is not going to pay the invoice from July because the sales representative promised the sales promotion, which wasn’t included. The collector needs to reach out to the sales department and talk to the sales representative. They may need to possibly get them on a three-way call with the customer and work out the solution.

Cashbook Powering Your Collections Efficiency

As we build Cashbook Collections and add things like activities, these activities can be assigned to the sales representative or shipping and receiving if for example, a customer received damaged goods. In a nutshell, there are so many reasons why a customer isn’t going to pay an invoice on time and it’s usually not because they’re difficult customers, although there are those too. Most of the issues are communication and resolving workflow issues. Therefore, the Cashbook Collections tool, with its various capabilities such as having the ability to see the customer contacts, collection notes and invoice level notes. As well as being able to create things like promise to pays, automating statements and letter correspondence that potentially mails out statements once a month. Anything to do with communicating to a customer to let them know what they need to pay and why. As well as anything that a customer can report back to the collector to help communicate what the problems are, that’s what collections is all about.

Should you choose Cashbook, you will collaborate with an excellent group of committed experts. We deliver customized solutions to meet our clients’ specific needs. We are a software solution helping to automate and streamline financial procedures for businesses with high transaction volumes. Learn how to lower DSO, remove manual processes, boost cash flow, and enhance cash visibility.

Simply reach out to our team for a call to help you and your business team today…..

Mike Burns, Product Director: Collections at Cashbook
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