Collections are a vital process for any company, as they ensure that cash flow is working correctly, guaranteeing a healthy business and efficient financial management.
However, this process is often ignored or does not receive significant improvements, even though it is essential for the financial health of companies.
This occurs for several reasons, but mainly due to the lack of technologies and systems that address the complexity of the collection universe and its specific details.
The Origin of Collection and the Challenges Faced
The charge originates from a negotiation and commitment between two parties, where rules and criteria are established regarding what will be delivered, be it a service or product, the payment date, the form of communication, among others.
A customer may not pay a bill on time for a variety of reasons, including poor planning, misunderstandings, cash flow issues, or, in more severe situations, a lack of desire to pay.
If we also consider overdue accounts and those protested at the notary’s office, the scenario is even more alarming.
Sales and Working Capital Planning
To ensure the company’s financial health, it is crucial to carry out adequate sales planning, as detailed in this article on sales forecasting .
In addition to selling, it is essential to ensure receipt so that the working capital formula works correctly.
In this calculation, in addition to inventory control, the receipt period and payment period to suppliers of the raw materials purchased are taken into account.
To summarize in a formula, we have the following:
Net Working Capital = Current Assets (-) Current Liabilities
- Current Assets: Includes all assets available for use in the short term, such as outstanding accounts receivable, inventory, etc.
- Current Liabilities: Represents the sum of obligations to be paid in the short term, such as suppliers, loans and salaries.
When the result of this formula is positive, it means that the company has resources to maintain its operations in the short term without having to resort to loans.
However, the value of accounts receivable can distort this analysis, since if it does not convert into cash within the expected timeframe, it can significantly compromise the company’s ability to meet its financial commitments.
The Impact of Payment Delays
Imagine the following scenario: you have a payroll to pay tomorrow, but you have not received any significant amounts from customers, making payments impossible.
And worst of all, there are no resources or systems available to quickly identify the reasons for non-payment and resolve the root cause of the delay, without relying on manual operational tasks.
In this context, it becomes clear how important it is to establish an efficient collection operation for the longevity of industries.
Even though accounts receivable does not currently seem to be a major concern, it continues to be an essential process for the survival of companies and deserves to be treated seriously, supported by technologies in conjunction with enterprise resource planning systems (ERPs) .
In addition to an automated and efficient process, it is essential to have easy access to clear information and reports that provide an accurate diagnosis of the operation and help identify and correct critical and urgent problems, such as delays exceeding 30 days.
Adopting a Smart Collection Ruler
To optimize the collection process, it is essential to implement an intelligent collection system that allows you to define specific communication rules according to each debtor’s profile.
Each customer profile requires specific communication channels, tones and cadences, increasing the chances of recovery and financial return.
Furthermore, it is important that each company customizes its messages according to its own internal rules and strategies.
The concern with sales and customer relationships is constant, as each interaction is unique – and billing is also a point of contact with the customer.
Therefore, it must be treated with the same attention, and not just as a standard and aggressive rule that treats all cases in the same way.
Example of Collection Rule: Protest in Notary’s Office
An example of an effective collection rule involves customers who have no intention of paying an overdue bill.
With this action, we achieved a recovery rate of 50% of all debts sent for protest, protecting our clients from debtors who may be acting in bad faith or who require a more severe warning to take corrective measures.
It is worth remembering that protesting is not recommended in all cases.
In many situations, a renegotiation, taking into account the needs of both parties, can be more productive.
However, there are cases where the lack of good faith is evident and protest as part of the collection rule has generated interesting results.
