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Helping Creditors See the Big Picture

Among the towering mountains and roaring rivers, Melissa Nash, president/ CEO of ARI (Accounts Receivables, Inc.) and recently installed president of the Florida Collectors Association, likes to enjoy all the elements of the outdoors and take in the big picture. Similarly, her journey in the accounts receivable industry has taken her from the first step of invoicing to the final step in collecting on delinquent accounts.

Nash started her receivables career with a produce company in the restaurant industry. She would start each week with a stack of green bar ledger paper fresh from a dot matrix printer and begin making calls. Working her way through the ranks she began to see how money flowed and, more importantly, what would stop money from flowing. The downturn in the economy in 2007 led friends in the construction industry to ask her opinion as to why their cash flow ceased and what they could do to remedy it.

Since, Nash has worked in collections and consulting helping businesses collect on delinquent accounts and adjust their organization to optimize information flow. The big picture as she has experienced it helped her help creditors make sense of complicated situations.

nash melissa“Once I understood what happened from an accounts payable point of view I married that into an accounts receivable perspective,” said Nash. “I try to teach my clients you need to make the A/P person in your client’s office your best friend because they have all the control in the world. They move your invoice or they can sit on your invoice.”

“I see receivables as an arm of sales,” explained Nash. “Until you’ve collected your money, you haven’t really completed your business transaction.”

Paperwork circulation is not a novel concept but it is one many companies let slip. Without a top-down examination of who is moving invoices and at what time, many companies will grow complacent with a dwindling cash flow.

“What I saw in a lot of businesses is they would have an entry-level person in control of opening the mail and delivering the invoice to the right or wrong person.”

Nash also stresses the importance of making sure contracts and assurances are in order. She stated she was shocked by how many companies were not protecting themselves with simple contracts. Especially when these same companies were coming to her with unpaid bills with the sum of $30,000.

“Who does $30,000 worth of work without a contract,” exclaimed Nash? “Who does $30,000 worth of work without a personal guarantee?”

Nash described several instances when she worked with companies that were suffering from cash flow problems and revealed it was done to help them see the whole picture and adjust accordingly.

Problem One
A business calls because they cannot seem to receive payment for jobs fast enough. This service provider does an average of 200 tickets a day in sales. The billing department requires bills be paid in 30 days. However, the invoices are dated for the day of the service but it takes 30 days to process and submit the invoices to the client. The invoices are already 30 days old when they are to be sent to the client.

This problem is compounded when so much time passes that the job is already closed out of the company’s bookkeeping department without a way to job-cost the bill leading to it ending up in a problem pile, costing even more time.

Solution
Flowchart how the process is supposed to be, not how it is, from beginning to end. Start with macro-steps and then add the smaller steps. Using movable post-its on the wall will allow the process to evolve as problems or needed steps are discovered. The  nished  owchart will either reveal where problems are or what your process  ow needs to conform to in the future.

 

 

Problem Two
Many larger companies are moving to different online accounts payable systems for purchase orders. A company servicing these large companies now has to deal with different computer systems with various requirements. This leads to A/R employees being pushed out of their comfort zones and forced to adapt or drag the company down.

Solution
To keep up with the growing demand, establish an internal training program or contact an external one to bring all employees to the required level
of expertise. This will either lead to letting employees go due to technology fueled redundancies or the need for additional and/or replacement employees to keep workflow in the A/R department ideal.

“It’s very hard to explain to a business owner why they might need to expand their overhead; they might need to hire someone a little more qualified, a little faster, a little more experienced or to add another position,” said Nash. “It’s very hard to try to quantify that upfront. But in the end they usually find the value in having cash flow.”

Seeing the whole picture has also helped Nash in ARI’s third-party collections as well. Nash has aligned ARI’s brand with stand out colors and other more appealing aesthetics to improve open rates on letters and overall debt response.

“We spend extra money to send our letters in color,” said Nash. “We are working on the font we use so it isn’t so negative. We use a colored logo. We don’t want dark boring colors. Our logo is orange. I want you to see something that’s a little vibrant. Something that’s a little happy.”