GPI 468 – Your company collection agent knows a lot about your customers. Ask him.

Collection agents talk to your customers every day.  They fax, email and call customer accounts payable contacts and many times are the first to hear about problems.  He sees all incoming cash, wires, money orders and cash that comes in to pay for your company’s products and services.  He also knows a lot more that most in your sales and purchasing departments do not get to hear.  Ask him to share issues important to your purchasing and sales and marketing departments.  Here are a few things to review, consider and share.

Issues collection agents here from customers daily:

  1. Payment addresses: The collection agent knows where the checks are cut (addresses appear on incoming checks).
  2. Money orders: Your agent knows which customers pay with money orders (an ominous sign they may or may not be able to set up a bank account or do not want to for some other dubious reason).
  3. Cash payments: Your agent knows which customers pay cash which is ok for some businesses but unusual for others.
  4. Billings problems: The collection agent finds his company’s billing clerks are slow, incorrect or are sloppy about getting correct or complete invoices out the door to customers. Many times customers’ AP clerks will be the first to tell collection personnel who called in that they received the invoice late in the mail (postal mail, delayed email or missing backup) and the Net 30 day terms will start from the day they received the invoice.  Heard frequently, this is a sign the company’s billings function and procedures need to be reviewed, corrected and monitored.
  5. Owner names on checks: Your customer may be owned by a parent company that controls the cash. If that is true, the parent company pays the bills with the parent name appearing on the check. This parent may own lots of other divisions that pose potential sales. These are easier sales than with a totally new company to target.
  6. Customer deductions taken:. The remittance advice attached to checks or added to incoming wires tells the seller (payee) which invoices the customer paid, which early payment discounts were taken and deducted by invoice but more importantly, credit memos created and issued and deducted by the customer for issues that irritated the buyer enough to have it taken out of the delivered check to your company.  Your sales people may or may not know about these chargebacks, thus they should be informed immediately to resolve the issue that angered the customer. They need to be informed and involved to ultimately approve it.
  7. Vendor number assigned: On the majority of incoming checks, the vendor number assigned to your company will appear on the remittance advice.  This vendor number is most likely used throughout all facilities of your customer and is very important to give to the sales personnel to use in seeking new sales in existing customer facilities. This will help convince existing buyers who hate their internal problems of setting up new vendors.
  8. Customer banks: The agent knows the customer’s bank (the bank name and address appears on checks and incoming wires and is reflected indirectly within the routing numbers at the bottoms of physical checks).
  9. AP office locations: The agent knows where the accounts payable personnel are located (sometimes in remote locations and ‘potential sales’ facilities). This is important if you decide to have someone go pick up a check in person.
  10. Customer complaints: Many times the agent is the first to know a complaint the customer has about a recent shipment that has not been relayed to sales personnel.  Your collection person knows this since the invoice is not paid and missed deliberately on paid check runs and is told when he calls that payment is suspended or ON HOLD.
  11. Customer cash strapped: The collection agent knows when funds are tight (payables clerks sometime disclose the company is short of funds when they are called and questioned about past-due invoices).
  12. Discounts applicable or not: The agent is aware of which discounts companies will and will not take (discounts offered and ignored).  Example:  They might ignore 1% but take 2% discount and pay early.
  13. General customer complaints: The agent knows what the customer complains about through AP clerks who are happy to tell any caller why that supplier is not getting paid (extremely good marketing feedback).
  14. Freight company problems: The agent also knows the problems incurred with freight and delivery companies (i.e. unsigned packing lists, poor documentation, missing proofs of delivery, no customer signatures obtained, etc.)