For many companies, past due receivables can make up 10% – 30% of their revenue base, but trying to diplomatically approach this situation, alone, can be uncomfortable and unsuccessful. That’s why, in the past, many companies have turned to collection contingent agencies. However, this process is expensive and can alienate customers and cut off future revenue by having a third party, who may be more interested in getting results than in retaining the customer.
That’s why a new process called “Pre-Collect” is becoming very popular. The Pre-Collect Receivables Solution provides companies with a diplomatic, professional and successful approach to those late-paying customers, while also maintaining hard-won relationships.
CTP Solutions President Jack Schachtel states, “The Pre-Collect Receivables Solution involves the late-paying customer and their financial responsibility an earlier stage of aging using print and phone communication in a professional and courteous manner. This early treatment stimulates and prompts payments while also addressing any of the customer’s concerns that may be impacting their late payment. In doing so, Pre-Collect helps speed up receivable action and prevents prolonged aging without any of the risks involved with using a high-end collection agency.”
The Pre-Collect solution works best when it is initiated early in the game and utilizes some of the same steps involved in the billing process. For instance, for an invoice due at 30 days, the Pre-Collect process would kick in on Day 31 with a reminder, courtesy notice or customer care approach, poised to stimulate the receivable. All communications are positioned as representing the client, replicating as much as possible their culture and approach.
In the past, when a company encountered a post-debt or non-paid receivable, they would have to forfeit up to 50% of their receivables by using a collection agency, plus, they would often lose the customer at the end of this process.
Now, the Pre-Collect Receivables Solution offers companies a way to improve their performance, reduce costs and successfully retain their customers.
Recently, a national media and communications company was experiencing a rapid growth in their delinquent advertising revenue. With their internal portfolio continuing to age, their staff was focusing its efforts on pursuing current receivables rather than those past due. This was leading to a larger share of overdue payments which were aging to more than 180 days. At that stage, many were being written off, with others assigned to a contingency collection agency. Morale was low and costs were high: for those receivables the agency was able to capture, 25% was sacrificed to pay the agency’s fee. It was at this point that CTP Solutions was contracted to initiate the Pre-Collection Solution for the accounts 180+ days past due.
After quick and rapid implementation, the cash flow and communications began to improve. As the delinquent payments began rolling in, the client became more successful, as well, in improving their internal collection performance. With the Pre-Collect program in place, fewer accounts are approaching delinquency and there is a more positive customer care experience, resulting in stronger retention and improved cash-flow.
To learn more about the Pre-Collect Receivables Solution, please email CTP President Jack Schachtel at: jschachtel@CTPsolutions.com or call: 818-597-1222 (ext. 304).
CTP Solutions, a nationally-based Business Process Optimization company, slashes administrative overhead by helping companies deliver processes more efficiently and professionally, including collecting late payments, delivering e-invoices, and reduce printing, processing, mailing and remittance costs. Visit CTP Solutions at: www.CTPsolutions.com.