Cost Reduction and Control Best Practices: The Best Ways for a Financial Manager to Save Money, 2nd Edition

Chapter 9

Credit and Collections Costs

BEST PRACTICES

IMPROVING CREDIT AND COLLECTIONS COST-EFFECTIVENESS

The credit community is evolving at lightning speed, especially in the electronic realm. However, a strong focus on the bottom line remains central. In their answers to an IOMA survey, respondents revealed how they had the most success in improving department productivity while simultaneously keeping a strong grip on costs. The results show a continued focus on getting the money into the bank as quickly as possible, but with a new emphasis on how this goal is achieved.

Annual Comparisons

IOMA has conducted this survey each year since the mid-1990s. Each time, the number one success category has been reducing the numbers of customers paying late. That continues to be the primary focus, now more than ever before. In fact, in this survey the highest-ever percentage (76.5%) of respondents selected this as a reason for their success. Along the same lines, improving the management of bad debt and uncollectible accounts took second place, with 58.8% indicating this as a reason for their success.

This survey indicated some dramatic changes. Up from a mere 21.1% in 1998, 57.1% of the companies surveyed indicated that they had improved departmental output by improving staff productivity; companies are relying, more than ever before, on their credit staff. However, the real surprise in this survey was the surge in the number of companies that improved their operations by increasing the ...