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It’s tough to understand why making an extra phone call, or sending one more letter to an account could be a bad move as a receivables manager. That’s because it’s easy to believe you’ll be able to collect the balance with one more letter or call. What’s an extra couple of pennies when the payoff could come in the thousands?

Believe it or not, that’s a less than cost-effective strategy. As time goes by, the accounts that simply may never pay begin to clog your workflow and the question changes: How many of your resources are you spending on accounts that are stagnant? If you don’t have a strategy to transition them out of your workflow and to a place where you can re-evaluate your plan of action, that number starts to cause problems.

“What accounts?” and “When?” are the million-dollar questions. The answers lie within what we refer to as an Exhaust Strategy.

If you’re an Ontario Systems customer, the first can be answered in just a few steps:

  • Evaluate your accounts with Event Tactics
  • Move your most delinquent to “Suspend” disposition, out of active workflow
  • Review your “Suspend”-dispositioned files every day for route balances, POE’s, or other new information that might qualify them for further collection efforts, cancellation, or litigation
  • Prioritize the accounts to be exhausted by score

Covering the “when” is a bit more subjective. A myriad of factors go into determining when an account would qualify for additional collection, cancellation, or litigation efforts. Factors such as costs, fee opportunity, and consumer scores all contribute to a successful exhaust strategy. Many of our customers simply exhaust accounts when they’re notified of a deceased customer, bankruptcy, or attorney assignment. Others exhaust accounts when their statutes become current. But the choice usually comes down to budget and account qualifications – Filing suit when funds are available to do so and all litigation requirements are met for the consumer.

Your own exhaust strategy comes down the unique challenges facing your business. And while it may seem like a daunting task, there are three reasons why you need one:

  1. Exhausting accounts ensures your dialing campaigns will always be built with truly active inventory.
  2. Working truly active inventory means your agents can put all their time and energy into assets likely to yield a return.
  3. Prioritization allows you to focus on sales and new inventory, allowing easier analysis across the markets you serve, and old accounts that have become likely to pay.

A good receivables platform can help you identify and score your inventory in real time, no matter how old it might be. And that gives you all the more reason to figure out what you’re holding, for better or worse.

 

Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies. 

© 2017 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

Posted by Terry Glidden

In his role as Lead Business Consultant, Terry Glidden is responsible for providing inventory analysis and operations recommendations for Ontario Systems’ clents. He has 12 years of experience with Ontario Systems, focused on business development and operations management. Terry also successfully operated a small agency focusing primarily on medical collections.
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