CHAPTER 6: COLLECTIONS
6.7 Compliance
The laws involving order-to-cash are complex. We will cover those related to collecting an unpaid debt here, while the laws that cover O2C more generally will be covered in Chapter 7.
There are more collection-related laws governing B2C than B2B. These laws are aimed at protecting consumers from abusive collections practices.
For collections generally, common-sense best practices will not only help prevent late payments and bad debts in the first place but will stand the business in better stead to collect legally and effectively if such activity becomes necessary. There are events beyond the customer’s control, like an economic downturn, which can cause customers to pay their debts late. As mentioned earlier, the collection process may be the first time the customer will have person-to-person contact with your company, so to retain the customer and their business, the contact should be professional at all times.
Collections must not only be handled in a professional manner but must also comply with local and national laws.
SENSITIVE DATA A majority of countries, including Canada, Europe, Japan, and the U.S., have rules about storing sensitive data. In collections and CMF management, access to sensitive data is part of the job. This includes, but is not limited to, customers’ bank account information, credit card data, tax ID numbers, and picture identifications. In general, all countries consider consumer and business financial information as highly sensitive and require that it be protected from fraud. They also require notifying the customer if there is a breach of security, which if inappropriately handled could lead to embarrassment, fraud, lawsuits, and penalties. PCI DSS (PAYMENT CARD INDUSTRY DATA SECURITY STANDARD) PCI DSS is a global law that covers all credit card transactions, whether involving consumer or business credit cards. Compliance covers, but is not limited to: wireless connections; on- line shopping carts; POS (point of sale) equipment and software; networks storing data; credit card readers; paper receipts with credit card information; any correspondence with credit card information; and the retention and destruction of such data. Every year, seller organizations holding data must confirm compliance or face penalties. ANTI-TRUST OR FAIR COMPETITION LAWS These laws are also global and were written to protect consumers and small businesses, as well as to encourage fair competition. It is a criminal offense to violate anti-trust laws and the responsible parties can face prison and penalties.
Work in credit and collections can involve speaking with competitors, especially when attending trade association meetings to get updates on customers’ current payment reports.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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