TSI Green Flag Recovery System

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IMPROVING YOUR COMPANYS CASH FLOW
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Billing CollectionsBest Practicesby

• Gene Rodriguez
• Transworld Systems, Inc.

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Gene Rodriguez

• Senior Account Executive
• 5 Years with Transworld Systems,Inc.
• Phone [phone]
• Fax [phone]
• Email gene.rodriguez_at_transworldsystems.com
• Website www.web.transworldsystems.com/Tampa/
• Address Transworld Systems,Inc.
• 5601 Mariner St., Ste. 475
• Tampa, FL 33609

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Best Practices Start at the Sale

• Written Agreements
• Payment Terms
• Possible Penalties for Violations
• Proof of Commitment

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What to include on an invoice?

• A clear invoice and request it on check
• A specific due date
• Details including the date of service, the case,
  time spent, copies provided along with
  corresponding rates
• Acceptable forms of payment
• Your phone
• No 30, 60, 90 boxes

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Start Early Recover More We
all know that the older an account gets, the
harder it becomes to collect. But did you know
that at 6090 days past due accounts begin to
depreciate at the accelerated rate of 1/2 per
day? At 180 days past due funds have
depreciated to the point where only 30 on
average will ever be recovered.
95
100
90
Critical Depreciation Period 1/2 per day
74
80
70
60
50
40
30
30
20
10
10
0
A G E O F A C C O U N T S
IN DAYS
0 30 60 90
120 150 180 210
240 270 300 330
365
Source U.S. Department of Commerce study on
depreciation of accounts held in-house
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Follow Up Early

• Be the Squeaky Wheel
• Written request for payment including due date
  and acceptable payment types
• Remind and thank them for earlier commitment
• Attach copy of previous commitment

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Top 10 Ways to Improve Collections

• Businesses do not always get paid for the service
  or product they provide.
• The following steps are critical to reduce this
  cash flow killing problem.

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Top 10 Ways to Improve Collections

• Rule 1
• Have a Defined Credit Collection Policy
• Clearly state your terms of payment in writing
  for every customer.

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Establish WrittenInternal Collection Procedures

• Easier when training new employees
• Demonstrates importance placed on collections
• Establishes performance benchmarks
• Review and update as needed
• Keep it clear and simple

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Defining a Collection Policy

• Define past-due
• Define acceptable payment arrangements
• How many written notices?
• How many phone calls?
• How is returned mail handled?
• Do you make personal visits?

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Top 10 Ways to Improve Collections

• Rule 2
• Invoice Promptly and Send Statements Regularly
• If you dont have a systematic billing system,
  get one.

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Top 10 Ways to Improve Collections

• Rule 3
• Use Address Service Requested
• Post Office will research addresses of mail
  skips and for a small cost of seventy cents they
  will forward the mail and in return send you a
  post card with the most current address on file.

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Top 10 Ways to Improve Collections

• Rule 4
• Use Your Aging Report, Not Your Feelings
• Be diplomatic, but be persistent.
• Tip Use colored paper
• for past-due notices

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Top 10 Ways to Improve Collections

• Rule 5
• Contact Overdue Accounts More Frequently
• Contact late accounts every 10-15 days.

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Cash Flow Improvement
Come on, I know youre in there, I can see your
eye through the peep-hole!

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Top 10 Ways to Improve Collections

• Rule 6
• Make Sure Your Staff Is Trained
• Even experienced staff can become jaded
• Firm but courteous is the key
• Staff must sell concept to clients that they
  should pay what is owed

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Collecting by Phone

• When to start calling
• Goal Payment in full with 1 call
• Track days/times of calls
• Getting past the gatekeeper
• Set goals of of calls
• Mental Attitude expect success
• Ask for payment TODAY (credit cards)

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Communicating by Phone

• Make a connection with Debtor
• Actively listen for clues for motivation
• Speak clearly and energetically
• Have objective in mind
• Know the next step be prepared
• Its my policy that
• Take good notes (just in case)

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Positive vs. Negative Communications

• I know you expected quality work delivered on
  time
• I know you have responsibilities as we all do

• This will cost you more if I have to take further
  action
• I dont care about your problems

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How to Ask For Money

• Asking For Money is A 3-Step Process

Step One Sympathize Show compassion, I know
how that happens sometimes This diffuses any
possible anger and catches them off guard.
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How to Ask For Money

• Asking For Money is A 3-Step Process

Step Two Restate the Obligation Mr. Smith,
your account was due on m/d/y. This should cause
some guilt on their behalf as well as have them
realize you are right in asking to be paid.
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How to Ask For Money

• Do Not Ask

• How much can you pay?
• When can you pay?
• Can you pay something?
• Note This gives control of the conversation to
  the debtor, enabling them to give unreasonable
  answers

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How to Ask For Money

• Asking For Money is A 3-Step Process

• Step Three How Much Are You Short?
• Mr. Smith, of the 200 that is due, how much are
  you short?
• If can pay some now, then give finite time to pay
  balance.
• If short whole amount, you are still in control
  of payment terms.

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Top 10 Ways to Improve Collections

• Rule 7
• Admit and Correct Any Mistakes On Your Part
• Customers realize that to err is human
• They will appreciate prompt and courteous action
  when an oversight is caught
• Beware Do not try and cover up mistakes!

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Top 10 Ways to Improve Collections

• Rule 8
• Follow the Collection Laws in Your State
• No public advertising of the debt
• No calling at odd hours, threats, etc

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Cash Flow Improvement

• DONT TELL ME YOU FORGOT TO PAY THE MARRIAGE
  BUREAU TOO!!

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Top 10 Ways to Improve Collections

• Rule 9
• Use a third party sooner
• After 90 days, in-house efforts are more
  expensive and less effective
• Third party demands motivate customers

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Remember this slide?
95
100
90
Critical Depreciation Period 1/2 per day
74
80
70
60
50
40
30
30
20
10
10
0
A G E O F A C C O U N T S
IN DAYS
0 30 60 90
120 150 180 210
240 270 300 330
365
Source U.S. Department of Commerce study on
depreciation of accounts held in-house
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When to Seek a 3rd Party

• According to written policies/procedures
• Broken promises check is in the mail
• Unable to reach by phone (voicemail, in a
  meeting, answering service, etc.)
• Disconnected Phone or Number changed to unlisted
• Missed Payments, Payments getting smaller

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When to Seek a 3rd Party contd

• Certified mail returned Unclaimed
• Admission of inability to pay
• Debtor says Youll get paid when I get paid
• Bounced Check and no response
• Disputed Balance, disputed quality of service or
  product

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What to look for in a collection agency

• Licensed, bonded insured
• All terms in writing
• References available
• Reputable
• Experienced in your industry
• Hold Harmless Agreement
• Performance Guarantee

• Nationwide coverage
• Pricing (flat fee vs. percentage)
• Status Reports
• Personal account representative
• Soft or hard collections at your direction
• Electronic account submission and updates

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Top 10 Ways to Improve Collections

• Rule 10
• Nobody Collects Every Account
• Even with a good billing and collection policy, a
  few accounts will never be collected
• A consistent collection process will diminish the
  number of slow and non pay accounts, and thats a
  victory in itself!

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Cash Flow Improvement
It may seem were sinking deeper into debt, but
really were just experiencing a quarter of
negative growth.
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CollectionsWhats Your Legal IQ?

• True or False 1
• An account must be at least 90 days past due
  before sending to collections.

FALSE
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CollectionsWhats Your Legal IQ?

• True or False 2
• You must inform debtors before turning their
  account over to a collection agency.

FALSE
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CollectionsWhats Your Legal IQ?

• True or False 3
• You cannot speak to a debtors spouse regarding
  the debt.

FALSE
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CollectionsWhats Your Legal IQ?

• True or False 4
• As long as a debtor pays 1 per month, you cannot
  turn their account over to collections.

FALSE
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CollectionsWhats Your Legal IQ?

• True or False 5
• If a check is marked Payment In Full you can
  simply scratch it out.

FALSE
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CollectionsWhats Your Legal IQ?

• True or False 6
• Even if you never use a collection agency, you
  can threaten turning the debtor over anyway.

FALSE
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Cash Flow Improvement

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Cash Flow Improvement
Loan Manager