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April 1, 2008
BCMA - It’s All About You! Welcome to the latest issue of BCMA News! 1. Why You Should Pay Attention to Your Customers’ A/R Reserves 2. Guerrilla Tactic to Stay Connected 3. Do Your Invoices Measure Up? Five-point Invoice Checklist 4. Humor Is the Best Coping Mechanism 5. Easy Way to Manage Large Flows of E-mail 1. Why You Should Pay Attention to Your Customers’ A/R Reserves One important number you should always be monitoring on your customers’ balance sheets is their accounts receivable figure. In particular, you should be monitoring its trend versus sales and, also, the level of reserves. Richard M. Rockwood of www.FocusInvestor. com describes this very well: “Regardless of what may be happening with a company’s top line revenue number, if the account’s long-term receivables line starts to rise, while its revenue shrinks or its growth rate slows, that could be a sign of a sluggish business. This information could drive a company to start using aggressive accounting practices to hide this potential slowdown. In addition, the reserves that are created against the receivables should be monitored. When reserves are declining while gross receivables are growing, sailors take warning. “Lucent’s situation [during the “boom” years of the late 1990’s] was a good example of this situation. It reported earnings growth in March 1999 because it decreased its reserves for doubtful accounts. Their reserves dropped by 11 percent in the same period that their gross receivable number increased by 26 percent.” In actuality, Lucent should have been dramatically increasing its A/R reserves during this period, since many of the new customers that they took on during this period were given extended dating and eventually didn’t pay at all. Nowadays, you can feel pretty helpless going on the road for more than a day or two and finding out that you forgot your cell phone charger. If that happens to you, check with the hotel you’re at. If it’s a fairly large hotel, chances are they’ll have a pretty good stock of cell phone chargers in their Lost & Found, and be happy to loan one to you while you’re there. It worked for us at a recent credit conference. In fact, they apparently had so many that when we offered to bring it back when we checked out they said, “Don’t bother.” 3. Do Your Invoices Measure Up? Five-point Invoice Checklist We always say that consistent application of the basics - the things you learned in the first year on the job - is the most important way to establish excellence. Time and again, we learn from the best that it's the little things, done properly time after time, that really matter. To that end, Westbury, NY-based outsourcer and collection agency STA International has produced a nice little booklet entitled "The Essential Guide to Getting Paid - practical solutions to improve cash flow," which has a number of items we feel are worth noting. Here is their checklist for proper invoicing. Do your invoices have all of these items displayed clearly?
I n talking about his longevity in the field, and the fact that he still enjoys coming into the office most mornings, one credit exec we respect a great deal joked that "anyone surviving 30 years in credit has to have an outrageous sense of humor." The comment itself caused us to laugh, but then he pointed out that he was serious about that comment. "We get beat up constantly. No customer ever likes to be told of a tough credit decision. And of course, sales people, if you take a nickel of their commission away, will object strenuously. You really need a thick skin and be able to look at the lighter side of things in this business!"Along those lines, he told the story of one the earlier days of his career. He was calling a delinquent account, and taking the slow payment very seriously. He explained to the customer how she wasn't living up to the terms, and she said "Yes I am." He then said, "Your terms are 2% 10, EOM ('End of Month')," and she replied, "Right, 2, 10, Every Other Month!" Another customer told him once that he couldn't pay because he was out of checks. The next month, he explained that he had purchased some checks, but he was out of stamps. In today’s era of information overload, it’s more important than ever to be able to filter what comes at you. One of the best ways to keep organized electronically and gain control over the flow of incoming e-mail is to use the “Rules” feature in your e-mail in-box. Once you discover its simplicity and power, you’ll do it again and again. Most of the top e-mail programs (Outlook, Lotus Notes, etc.) allow you to easily set up folders in your e-mail box other than the main “in-box.” A rule is your way of telling your e-mail system to automatically route e-mails from (or to) a particular source to that folder. For example, let’s say you receive many e-mails from your credit group. You could set up a folder entitled “credit group,” and then have any e-mails from the group automatically routed to the folder. To get started in Outlook, simply click on the “organize” icon. The easy instructions will appear on your screen. The advantages are: 1) you send e-mail to designated folders that you can review when you are ready; 2) you can more easily find old e-mails by subject. Once you learn how easy it is (and it takes about 20 seconds to set on up), you’ll want to set up many rules to keep e-mail from various sources organized. Get started now. To learn more about subscribing to Credit Today, check out our web site at http://www.credittoday.com/ Prompt Payment Policies- Are They Worth the Trouble? Survey Results- Formal Credit Department Training Programs Missing at Most Corporations Benchmarking Collection Agencies- Tips for Maximizing Your Relationship With Your Collection Agency Can You Add a Surcharge to Credit Card Payments- No, but . . . |
