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October 1, 2008
BCMA - It’s All About You! Welcome to the latest issue of BCMA News! 1. Principles of Proper Recognition 2. Quantifying a Gut Feeling: Questions to Ask Your Sales Rep When You Suspect Fraud 3. Humor Is the Best Coping Mechanism 4. Sure-Fire Way to Add Some Juice to Your Job 1. Principles of Proper Recognition Employees of a Buffalo, NY frozen foods company flying on private jets to exotic destinations haven't done anything wrong. Just the opposite. They've won the trips in recognition of having done their jobs so well. These jet trip rewards are cited in "The Carrot Principle," a book dedicated to the proposition that many problems in the business world stem directly from managers ignoring or just taking for granted their employees' best efforts. It's an old saw that recognition ranks right up there with—and sometimes above—money and promotions as a motivator. What authors Adrian Gostick and Chester Elton point out is that providing this recognition in the right way can be a challenge in itself. A trip to anywhere in a private jet may seem over the top, but there's no doubt there are some managers who could even botch that up. Gostick and Elton insist that presentations have to be made with real feelings of appreciation, and they cite four essentials of an effective recognition program. Recognition, they say, must be (1) deserved, (2) frequent, (3) specific and (4) timely. The size of the reward should, of course, be proportionate to the work achievement. Handled properly, an afternoon off or a ticket to a ballgame can have just as much impact as a major reward. "We all want to matter to those with whom we work," note the authors. Showing your employees how much they matter has as much to do with how you offer recognition reward with what that reward may be. 2. Quantifying a Gut Feeling: Questions to Ask Your Sales Rep When You Suspect Fraud Credit fraud is always a problem for credit execs. Conmen are aware of how companies work and use that knowledge to commit credit fraud. For example, they know that sales people will normally sell goods sight unseen to a new customer and that most credit departments are under tremendous pressure to establish new accounts and approve orders - especially large opening orders from companies that appear to be creditworthy. If you receive a rush order on a new account and can't gather enough good information to make a positive credit decision, here are a series of questions to ask your sales rep. Remember, your sales rep should be your "eyes and ears" in the marketplace, and you can find out a lot from them if you reach out to them in the proper way. First, find out if the order was unsolicited. This is one of the most important red flags. If you think about it, in most instances, your company works hard to get your product out into the marketplace. When the orders come in too easily and unsolicited, that's a big red flag. But of course, that alone probably isn't enough to turn them away. Another thing to dig deeper on is your sales rep's knowledge of the market. Most really do have a keen understanding of the marketplace, its customers, suppliers, and how things work, or should work. As such, it's usually helpful to ask them. Questions to Ask Your Sales Reps
3. Humor Is the Best Coping Mechanism In 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. Pamela Krank, president of St. Paul, Minnesota-based consulting firm The Credit Department, Inc wrote in her client newsletter that senior managers generally say they are satisfied with their credit department based on the following conditions: Their satisfaction is based solely upon past results and very limited or subjective measures That they will remain satisfied until a credit disaster happens, and They have verbally communicated a "NO SURPRISES" policy to their credit department to ensure against these disasters. "This is the typical mode of operations (stagnant) for credit departments run as cost centers," says Krank, who believes that it is important for credit to contribute to the bottom line, not just protect it. To aid in this goal, she recommends measuring efficiency to make sure you are performing at or above industry standards? Her favorite efficiency measures include: Customer accounts per week per full-time equivalent (FTE) Customer calls per hour Unauthorized deduction dollars recovered per FTE Unauthorized deduction dollars recovered as a percent of sales Number of deduction files worked per FTE Credit costs per sales dollar Collection costs per sales dollar Deduction management costs per sales dollar "Most companies only know the basic effectiveness (DSO, days over 90, etc.) measurements for their credit departments: DSO and total costs," says Krank. "You may be losing hundreds of thousands or even millions of dollars each year due to inefficiencies within your company." We agree with her. Plus, your job will be a lot more exciting when you’re aiming for excellence, rather than simply operating in a defensive mode. To learn more about subscribing to Credit Today, check out our web site at http://www.credittoday.com/ Credit Group Participation ROI Averages More Than 100 Percent Per Week (No, that's Not a Misprint) Survey Results: Telecommuting Not Gaining Traction in the Credit Community Survey Results: Credit Executive Attitudes Towards Outsourcing Strongly Affected by Experiences With Receivables Outsourcing |
