CHAPTER 4: CREDIT MANAGEMENT
Cindy Clark, Senior Manager for AR Services at VSP Vision Care “We’ve established a partnership between our Billing/AR team and Sales that starts with representation of our billing team at welcome with many of our new customers. The sales team conducts welcome conference calls to introduce clients to our services and the billing representative introduces the client to the invoices/statements, tools and resources available to them. From there we work together to respond to client inquiries or concerns, including the forwarding of inquiries that come to one side when the other could better respond. We use Salesforce for communications so there is visibility in communications across the organization. And, when we identify delinquencies we include a copy of our payment reminders to business partners in sales so they are aware, and they are often able to help us connect with the client. Sometimes the churn is as simple as the customer not providing new billing contact information and Sales can often help us work through those challenges. Our larger delinquencies are noted on reporting that is shared with executive leaderships across Finance and Sales, better ensuring awareness and support for coordinated effort to resolve the delinquency.” SALES INCENTIVES AND CREDIT If the sales department takes orders and receives commissions only after the invoice has been paid in full, they have a very real stake in the game. Sales will take a greater interest in the credit analysis process if the right commission structure is in place, and perhaps even take on certain responsibilities that require they be trained in credit fundamentals. For instance, suppose the sales rep takes an order from a customer that the rep believes will have trouble paying the invoice on time. If their commission won’t be paid until the invoice is paid, they may want to require the customer to pay via credit card. Usually, this is an easy and very acceptable resolution. The sales rep could simply say: “for new accounts, we need a credit card until we have established a history, and then an open account can be requested.” However, a company has to be very careful what it asks for since this could also result in fewer sales. The sales rep may miss taking orders because of their perception, rather than the decision being based on real or validated facts. If the credit department has the goal of increasing sales, they can apply a risk factor and accept more customers’ orders, thus increasing profit. This will require watching the accounts that normally might have been turned down but now have been granted a (small) credit line, in order to ensure that they are paying on time. It also will require the cooperation of the collections group. Decide if credit management or the collections team will be responsible for watching borderline accounts. Credit management can decrease risk by offering credit-card terms until the borderline account develops some history and stability.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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