Past Due: How to Turn Collections Into A Positive Customer Experience
What do we know about payment collection? I think we have always held these truths to be self-evident:
- The business depends on it. If we don’t get paid we’re history
- Because it’s important we need to have rules and targets that protect the interests of the business
- Because it’s important it needs to be handled by a dedicated and discrete team…
- … and that team needs to be in-house…
- … because no one understands our business, our context and our customers better than we do
But wait. The thing about self-evident truths is that they exist to be challenged. Ask any reputable scientist and you’ll be told that whenever you develop a new theory your first step should always be to do everything you can to prove it wrong. Then, and only then, can you be reasonably sure you’re right.
If we use that logic here, I don’t think any one of us would need to challenge the first truth. Do we really want to forego being paid to find out what would happen? Of course not.
Equally, there’s no question there have to be processes in place that serve the business’s interests. But in this case it’s not the whole truth – and in considering this and the other points that follow it we might start to see many of these things aren’t actually that binary.
Let’s take that point again. Yes, rules and targets for payment collection of course need to protect the interests of the business – but they also need to be mindful of the interests of customers. Why? Because customer relationships are a key asset on which the business needs to bank. If we ignore this when pursuing payment we may lose the customer’s goodwill and possibly future business – and that, of course, is not in our own interests either.
Now let’s take the final three points together. Yes, it’s vital that the collections team is dedicated, mindful of the importance of its role and in command of all the information it needs to fulfil that role successfully. But should it really be discrete – and does it really need to be in-house?
The connectedness of things
Just as in the supply chain, general finance and administration, human resources and other areas of the enterprise, so in payment collection the importance of the connectedness of things is becoming ever more apparent. Receiving payment is an integral part of the entire order-to-cash (O2C) cycle, and the more the people responsible for it have insights into other parts of the overall process the better able they are to do their jobs. For instance, knowing customers’ order history, their credit status, their payment procedures, and the manner in which they have asked to be billed in the past can all help to streamline the collection process not just for the enterprise but for the customers themselves. Anything that removes obstacles or irritations from the point at which people part with money has to be a good thing.
No more closed doors
Equally, organizations are increasingly realizing that credit and collections processes and indeed O2C as a whole need not be an in-house function and that there can be tangible business benefits to a managed service approach. At Capgemini we’ve seen some impressive client gains including up to 30% savings through operational efficiency improvements coupled with significant working capital benefits such as lower DSO and overdue receivables reduced to less than 5%. On top of that, our clients realize up to 20% savings from infrastructure investments, as well as opportunities for enhanced risk management and investment growth.
Do these in-house benefits come at the expense of customer relationships? Not at all. It’s really a question of how well the team responsible for managing the integrated O2C process and making collections understands how important the client’s customers are and what’s needed to keep maintain or even improve upon the status quo. At Capgemini we even have a Global Collections Academy to ensure best practice is shared, so collectors feel empowered, not just in terms of their familiarity with processes, but in terms of the soft skills and customer experience focus they need when engaging with customers.
A better way?
So, do we still hold truths to be self-evident? Well yes, sometimes we do; but that doesn’t mean we shouldn’t challenge them every now and then and see if there’s a better answer. In O2C we work with several major enterprises who have done exactly this. They have found that new thinking can deliver not just dependable collections success, increased efficiencies, and reduced costs – it can also create a climate in which their customers will buy more, pay faster and be happier.