AR: A Step Forward

1
A/R A Step Forward

• Presented by Les
• June 23rd, 2004

2
The Current Collection Process

• Searching for unpaid bills by Company.
• Generating a call list using Microsoft Excel.
• Have the list cleared by Mooshon.
• Call the Customer to see if they have received
  the invoice and politely asking the status of
  that invoice.
• Call the Customer repeatedly until a payment is
  made.
• Mark the payment on both the MIT system, the
  Excel Sheet, and in the Sales Books.

3
Problems that we are facing today

• Process takes too long to set up and collect
  relevant information.
• Not fully integrated with the MIT system.
• Client's not receiving invoice in a timely
  manner, and going upwards of 5 months without
  paying.
• Too much time for collection calls.
  (approximately 5-7hrs a day)
• Disputed invoices not being handled in a timely
  fashion.

4
Goals that we want to achieve

• Integrate Collection tasks with the MIT system
  and automate information generation.
• Provide new Terms and Conditions for payment and
  enforce them.
• Provide incentives for Client's that pay on time.
• Lighten the call volume for A/R staff so that
  they can work on all duties.
• Make disputed invoices more manageable.

5
Invoice tracking system

• We will take a look at
• What we need.
• New Status Definitions.

6
What we need Look Feel

• Three new sections should be added to the invoice
  showing the
• Status of the invoice,
• The Wait Time associated with the customer,
• The customers overdue credit settings.
• The status and wait-times should be configured
  manually from the invoice, or from the Customer
  Screen.
• Overdue settings should only be edited by the A/R
  staff through the customer screen.

7
New Status List

• Issued
• Disputed
• Overdue
• Collections/Legal
• Paid
• Complete

8
Status Definitions Issued

• Once an invoice has been approved it should be
  automatically set to Issued.
• The status remains Issued according to the set
  Wait Time.

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Sub-Definition Wait Time

• The maximum amount of time that an invoice
  should
• a.) Remain idol without payment,
• b.) Be disputed.
• This time should be changed on the customer's
  Client Profile by Admin Staff.
• The system should calculate the Wait Time in real
  time per invoice.

10
Status Definitions Disputed

• This Status should show that there is a Dispute
  with the bill.
• This Dispute can be lodged by the customer
  through their Customer Log In, or by Admin.
• A Dispute should only be lodged during the Wait
  Time of the invoice.
• A Dispute should go to the Collections Priority
  page with the highest priority.
• Dispute should be assigned to relevant Admin
  staff, but still owned by the A/R department.

11
Status Definitions Overdue

• This Status should show what collection
  procedures are to be taken for this client.
• Once an invoice is set to Overdue, all other
  invoices for the client should be set as well,
  and grouped together.
• The A/R department should set the time frame for
  each stage of Overdue after coordinating with
  Marketing.

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Sub Definition Overdue Stages

• First Stage Email/Fax/Mail reminders invoice.
• Second Stage Email/Fax/Mail a second reminders
  invoice.
• Third Stage First call to customer. Rep should
  ask if invoice was received, and double-check all
  relevant information.
• Fourth Stage Second call to customer. Rep
  should try to urge the customer to pay. System
  should also generate an interest invoice,
  tracking how many days the invoice is overdue.
• Fifth Stage Final call to customer. Rep should
  assess the account Should it be settled, or
  should it be sent to a Collections Agency?

13
Overdue Stages Continued

• The time frame for each stage should be generated
  based on the clients relationship with the
  company.
• This relationship should be decided by the A/R
  Department, the Head of Finance, and the Head of
  Marketing.
• The time-frames for each stage should be entered
  and edited from the clients page by the A/R
  Department.
• The MIT system should automatically upgraded from
  one stage to the next when the set time is
  reached.

14
Status DefinitionsCollection/Legal

• Some invoices may require intervention by a
  Collection Agency or actual legal actions to
  resolve.
• Some clients should go straight to a Collection
  Agency after passing through all five stages of
  Overdue status.
• Some clients might need Liens and other legal
  actions performed to prompt payment.
• Such actions should be monitored by A/R staff.
• The clients account should be placed on hold.

15
Status Definitions Paid

• An invoice or group of invoices that has been
  paid by the client and processed in the MIT
  system should automatically be shown as Paid.

16
Status Definitions Complete

• An invoice or group of invoices that have been
• paid by the customer,
• processed on the MIT system,
• checked as paid in our bank account.
• The A/P department should set this status when
  the payment shows in our accounts.
• The A/R department should monitor these postings
  to insure that the money has been deposited.

17
Collection Priority System

• The Collections Priority System should allow the
  A/R staff to fully integrate with the MIT system.
• A suggestion for how it should look
• This is almost the same as the Collections link
  in the MIT A/R site.
• The Notes should be linked to the Admin Notes for
  all of the clients invoices.
• The Status should be linked to the Invoice
  Tracking System.
• The rest should be linked to the already existing
  MIT system.

18
Collection Priority System Flow

• Here is a suggestion of how the Collections
  Priority System should flow
• 1.) Any invoice or group of invoices totaling
  over 10,000. (By amount owed)
• 2.) Any Disputed invoices. (By amount owed)
• 3.) Any Client's Overdue ltStage 5gt. (By amount
  owed)
• 4.) Any Client's Overdue ltStage 4gt. (By amount
  owed)
• 5.) Any Client's Overdue ltStage 3gt. (By amount
  owed)
• 6.) Any Client's with a Collections/Legal status.
  (By amount owed)
• 7.) Any Client's with a Paid status, but not
  Complete. (By amount owed)

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Terms Conditions

• The Terms and Conditions of an invoice should
  change according to the parameters set for the
  Customer by the A/R Department.
• Some suggested terms and conditions to add or
  modify are
• C.O.D. for 1st time residential Client's.
• A notice of possible collections actions after a
  set amount of days (Fifth Stage).
• The time limit for disputes (generated from the
  wait time).
• Changeable interest percentage based on allowable
  interest rates, and clients relationship with
  the company.

20
Incentives

• Monitoring and upgrading a clients file to
  reflect payment trends.
• Provide interest relief for clients that pay with
  a credit card immediately.
• Credit the customers next invoice as a thank you
  for prompt payment.
• Sending a thank you letter and a credit to
  clients that repeatedly pay during the wait time.

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Conclusion

• With the proposed system we will increase
  efficiency by
• Integrating Collection tasks with the MIT system
  and collect relevant information.
• Providing some new Terms and Conditions for
  payment and enforcing them.
• Providing incentives for Client's that pay on
  time.
• Lightening the call volume for A/R staff so that
  they can work on all duties.
• Make disputing invoices more manageable.
• But most importantly
• Bring in more money for the company!