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Check out our informative articles below!


Maximizing Your Commercial Collection Efforts

The typical commercial waste management business involves multiple business models: front lift and rear load scheduled services, roll off services, portable toilet services and projects services. For commercial scheduled services, customers can include department stores, restaurants, small stores and small businesses.

The majority of rolloff customers are large and small contractors, roofers and developers and they can cause serious collection problems. Most of your scheduled service customers will not present the same problems, although there are exceptions.

For collections efforts to be successful, you must have in place a specific strategy that will be applied uniformly across the administrative operation to maintain control of your receivables. The procedure must be well planned and methodical, and you cannot apply it randomly. When you send a notice of imminent suspension to your customer, you must have the procedure in place to back up your promise.

Even if you have only a few hundred customers, the management of receivables and collections is a challenging job if your information system is poorly designed. In many cases, companies are employing two or more people to work collections, but they ignore all but the most serious problems, typically those in the 90+ days overdue. If receivables are averaging 65 days or more, your system is inadequate or it is being used incorrectly.

Start With a Plan

There are three essential aspects to the management of receivables:

1. The design and organization of the information;
2. The collections process as managed by your company;
3. The collections process as managed by your collection agency and your support of that agency with timely information.

The Design/Organization of Information

The management of collection data on your system is dependent on how well the information has been linked, whether the correct fields are completed, and whether they are available in the right place, the right format and at the right time.

The first thing you must realize is that commercial accounts frequently involve multiple service sites, as in the case of a contractor who is receiving rolloff service for more than one construction site. If these accounts are independent of each other and have their own current, 30, 60, 90 and 120 day information, you have a serious problem; the contractor could easily continue receiving service on one site while defaulting on another.

There should be one billing site that represents the Accounts/Receivable for all linked service sites. Then, if you have to suspend service to an individual site for lack of payment, you will actually suspend the customer, including all the other sites, which may well speed payment of the balance.

There are two situations where this would not apply. If you choose to group a chain of independent franchises, you would still preserve the individual information for each site. Or, where a property manager for a group of independently-owned properties receives the bill for each property, you would maintain separate billings and forward them all to the manager.

Once you have your customer records organized correctly, it is time to turn your attention to your suspension procedures. When you suspend a customer as of a certain date, that information should pass to two critical areas: the scheduled route listing and the dispatch ticket/work order posting program. Suspension of a customer on the master record means scheduled services will be cut off and, within the dispatch program, it will keep you from creating additional tickets for suspended customers.

The Collection Process Managed By Your Company

Once your system is configured to identify and flag customers who have entered the collection process, it is time to handle company level collections efforts. If you follow the process detailed here, you will need only one customer collections officer to manage several thousand customers!

First, make sure your system includes a program which will build a list of all customers who are past due, using a minimum balance entered by the operator as a means of sorting these customers from the rest. The operator should have the discretionary ability to remove customers with extenuating circumstances.

Then, the system must produce a customer notice with the customer name and address, amount due, date when service will be suspended, number to call with questions, and the exact place to send payment. If payment is not received by the notice due date, then the customer will be suspended, and throughout the system that customer will have the suspended status. Therefore, the suspension will be noted on route sheets, when a ticket entry is attempted, or when the customer contacts your service representatives.

At the same time, the system must note the customer account with the suspension date and status, and the system should alert an operator that any subsequent receipt being posted is going to a suspended account. At this point, if the account is paid in full, the operator can remove the suspended status from the customer account.

Your collection officer may want to control who is removed from suspension. In that case, you should be able to turn the option off, a feature which should either be included with your system software or incorporated when you install it.

There are other tools that can also be used during the collection process, for instance, container movement or non-movement. If you have a restaurant customer on scheduled service, you can leave the container and allow it to fill up, which becomes a health problem for the restaurant and, subsequently, bad for business. You can just about count on the fact that they will pay up promptly.

Leaving a full container on site can also be a problem for a stubborn, non-paying contractor. Use this leverage as a means of getting paid.

For a department store, you should try the reverse strategy: move their container so they have none. With no place to put the cardboard and packaging, warehouse space will fill up in a hurry, not a good situation for a business to run smoothly.

Another method of nudging slow-paying customers is to have your company attorney write a collection letter to those customers, before you ever send their account to a collection agency. Many times, receiving an attorney's letter is enough of a motivator to make the collection process successful.

The Collection Process Managed by Your Collections Agency and Your Support of the Agency with Timely Information

When dealing with severely overdue customers, it is time to bring in the "heavy hitters" or, more accurately, your outside collection agency. Make sure your system can build a list of these delinquent customers, at the same time generating a letter to the customer to explain that the account is being turned over to the agency. Make sure the letter includes the account number, name, address, amount due, a drop-dead date for payment and the name of the collection agency. You should also provide a telephone number for your company and the collection agency.>/BLOCKQUOTE>

Once the drop dead date arrives, use the system to generate an electronic file with all the necessary information to assist the collection agency with their process. Always check with the agency for the proper format of the data.

At this point, your system should update each of the affected customer accounts as follows: create a credit of the open balances and code tham as bad debt write offs, and create a bad debt journal entry for each customer. Use this amount as a posting reference for any recovered funds.

Even if your customer has been turned over to the agency, you should still consider the client as a potential good customer if they pay the full balance.

Other Items to Consider

Make sure your invoice is clear for the customer. If the invoice is confusing, they will delay payment until they can get clarification in a phone call, or worse still, delay any decision altogether.

Offer credit cards and ACH payments for customers to pay their balances. Offer as many methods to pay the bill as is possible, to make it as easy as you can. If you take credit cards, you can control the payment process, thus reducing future collection problems.

Be as consistent in your billing process as possible. Make sure you bill the same time each month or each week, so customers learn to expect, and plan for, the arrival of your bill.

Set credit limits in order to reduce your customer's maximum liability to you. Make sure your system includes all of the invoiced sales as well as services completed, but not yet billed when testing for the balance against the credit limit.

Early payment discounts can also speed up payments. Make sure your system provides good information to assist in the distribution of discounts. The system should store the payment days per customer, the discount days and discount percentages. Some systems also allow for using a fixed discount amount. The receipts posting program should also provide the exact amount of the discount available for the operator when posting the payment of the invoice.

It is critical to your survival as a business to establish strong collection procedures. Especially when choosing a new software system, check to be sure of its capabilities to assist in this process; it will help you avoid spending thousands on patchwork solutions or, worse still, adding to staff indiscriminately in an effort to handle the problem. Spend your money on a good information system to ensure more cash in the bank for years to come.




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