Credit Management magazine October 2017

OPINION
GETTING THE
JOB DUNN
Chris Sanders explores the new technology being
deployed in collections management.
AUTHOR – Chris Sanders FCICM is Head of Accreditation – CICMQ
Chris Sanders
CHASING customers for money
has been around since trade
between one person and another
first began and surprisingly
the word ‘dunn’, which means
to make ‘persistent demands
for payment’, has been around since the 17th
century. It pre-dates the early days of Dun &
Bradstreet by a couple of hundred years, if
online sources are to be believed. So, when we
say dunning it means more than just reminder
letters.
Standardised and ‘persistent’ collections
processes have been around for a while and
if you think about it, they have remained
pretty much the same; a series of steps taken
at various intervals after the invoice is sent or
becomes due. No rocket science there! The
type of interaction has, of course, developed as
technology has changed, starting with letters,
telephone, telex for international, fax, text and
email. Segmentation of customers has moved
on from alphabetical order to matching the
collections function resources, or splitting
out residential, small business, national,
major, strategic, etc. This segmentation is in a
constant state of change in some organisations
especially those aligned with the salesforce.
The constant striving for increased
collections and reduction of debt now means
that the number of tools that perform these
tasks and strategies has grown exponentially,
but at the heart of these systems and processes
lies a single objective – to influence a customer’s
behaviour usually after the event – the event
being the invoice. Of course, some customer
behaviour is fixed, based their processes for
payment and the myriad of steps that seem
to prevent the payment being made – some
offshore accounts payable functions are a case
in point! The ‘five invoices at a time’ rule, and
never speaking to the same person twice, are
common credit controller experiences.
The development of systems that sent
‘automatic collection letters’ when a debt
was overdue at pre-determined intervals
was a huge step forward, even though in my
organisation in the 90s there were only three
reminder letters of escalating severity, and
the segmentation of the customer base was
they either got the letters (residential and
small business) or not (major accounts). The
game changer in my department back in 1993
was linking this system to a predictive dialler,
possibly the first in a collections environment,
and with this came a 300 percent improvement
in productivity. Suddenly customers at the
bottom of the priority list with smaller values
were being contacted for the first time. The
telephone collections call centre was born: as
inbound and outbound calls could be blended
at busy times, and thousands of customers
contacted by relatively few credit controllers
every day. These tools were great for smaller,
non-disputed debt, but for everything else
it was still a laborious process of account
reconciliation, query and dispute chasing.
Additionally, calls were made to customers
who would pay anyway and the whole process
remained essentially reactive, aside from the
new customer welcome calls and pre-due calls
for the much larger customers.
‘Know Your Customer’ is a simple statement
but it has become an industry in itself,
from confirming who your customer is to
regulatory compliance, but from a collector’s
perspective, understanding your customer is
about behaviour and this is the game changer
of today. I mentioned in a previous article
‘Robot Wars’ (Credit Management July/August
2017) that some software companies believe
that 70 percent of the collections effort is
wasted and we have all heard experienced
credit controllers say things like ‘he always
pays on the second of the month’. This 70
percent wasted effort is because of the reactive
nature of collections – we issue an invoice
and chase it regardless. The experience and
knowledge a credit controller has about their
ledger is critical. I knew a credit controller, we
shall call him Jeff (this is his real name), whose
knowledge of his section of the debtors’ ledger,
customers, payment patterns, disputes was
encyclopaedic and this knowledge ensured
The Recognised Standard / www.cicm.com / October 2017 / PAGE 44