Small steps, big rewards: seven tips for enhancing credit and collections through improved communication.(selected topic)

As the economy improves and business accelerates, this is an opportune time for companies to enhance their credit and collections function. With more potential customers to evaluate, and a growing number of payments to collect, it's essential to have the best possible practices in place. A high-performing credit and collections function minimizes risks, keeps cash flowing, improves customer service and, ultimately, drives business.

Fortunately, a little attention paid to bettering your practices goes a long way. Even a small increase in your collection percentage can have a dramatic impact on the bottom line. Moreover, some of the most effective proactive steps you can take are simple ones--such as improving communication and cooperation regarding credit and collections issues. The following are seven low-effort ideas that can yield high-impact results:

1. Communicate a clear credit policy. Your company's credit policy should be a tangible document, not word-of-mouth information that changes from day to day. Make sure everyone affected by the credit policy is aware of it. This includes departments such as sales and marketing, customer service, operations, collections, shipping and quality control. If you also involve these groups in developing or revising credit policy when appropriate, they will feel more vested in its success.

Once you have a written policy, communicate to key employees the importance of demonstrating support for the policy by adhering to it. If your company's payment terms are 30 days, yet salespeople repeatedly tell customers they can have 40 days, the policy will be undermined and eventually ignored altogether. Help ensure your policy is accepted by keeping it simple, east to understand and accessible. Posting guidelines on your intranet will also enable employees to become familiar with your requirements, and they won't have to call credit and collections staff every time they have a question about it.

2. Train employees to avoid errors that delay payment. Credit and collections professionals are not the only ones who help ensure the company gets paid in a timely manner. Numerous employees are involved in converting orders to cash, and they must all understand the importance of their individual roles. Therefore, it can be helpful for credit and collections professionals to participate in training fellow employees on how to avoid common errors during the initial stages of customer contact. As anyone who has ever worked in collections knows, the one percent that is not done correctly at the outset can cause 99 percent of the challenges when the time comes to collect what is owed.

Consider, for instance, a typical order fulfillment process. Several different people are typically involved in the entire process--from taking an order, assembling it, creating the invoice, packing and shipping. A mistake at any of these points could cause a delay in receiving payment. Similarly, it's important to impress on salespeople the need to gather accurate and thorough information from prospects to ensure the credit department has the correct data on which to base decisions.

3. Integrate sales with credit and collections. It's important for staff working in these two functional areas to recognize their interdependence and build a supportive relationship. Cooperation begins at the start of the sales process. Encourage salespeople, assisted by you or your staff when practical, to set payment expectations with customers and prospects when a proposal, estimate or contract is delivered.