Feature Story

Focus on ARM (continued from page 1)

The survey indicates that the probability of full collection on a delinquent account drops dramatically with the length of delinquency. For example even after only three months, the probability of collecting a delinquent account drops to 73.1%. After six months, 50% of delinquent accounts will never be collected. And after one year, the probability of ever collecting a delinquent account drops to 25%

In order to streamline the sales-to-cash cycle, a company’s accounts receivable (A/R) function must ensure the full and timely collection of payment from the customer base. A well executed A/R function maintains the critical balance between strong customer relationships and tight cash inflow management.

Outsourcing ARM—A Growing Trend

As more companies discover the benefits of contact center outsourcing, one of the most immediate functions they are likely to outsource is accounts receivable management (ARM).

Why? The ARM function is resource-intensive, commands the constant attention of management, and is key to a company’s operations. Contact centers that offer ARM solutions are growing rapidly because clients are realizing that the market offers suitable solutions that help reduce the costs of receivables without significant capital or HR investments. And for those using vendors with a global footprint, they benefit on a worldwide basis.

Contact Center providers are charged with one major objective: improving cash flow. Bill Rieke, VP of marketing for Creditek, a Genpact company, said in an article in FAO Today that outsourced AR is being driven by several factors. As companies strive to shorten the collection cycle, they are looking to better manage deductions and disputes. In industries such as consumer product goods and retail, quick resolution of outstanding issues are critical, so buyers are looking to vendors to bring efficiencies to the process. Furthermore, vendors can help identify and correct problems outside the receivables realm to improve the revenue cycle, Rieke said.

What You Should Look For In Your ARM Vendor

In order to make your ARM initiative a resounding success, you need to look for these capabilities in your Contact Center:

  • A model that adjusts to your specific business demands
  • Workflow based technology and methods that drive operational efficiencies
  • Visibility in process and reporting to assist you in managing and controlling the ARM process
  • Trained ARM professionals who can attain top level results

Driving Operational Efficiency

Make sure the vendor can provide a scoring and segmentation modeling to identify what collection strategies should be utilized, which receivables are most likely to be recovered and a sequencing priority for working accounts

  • Data hygiene and append services—Your efforts will be for naught if you cannot make contact. Ask to see you vendors RPC (right party rates). Does your vendor have technology that integrates with their collection systems to automatically connect account representatives with the most highly profitable accounts?
  • Make sure the vendor is equipped with the right level of people and system resources so they spend less time ramping up and more time on the phones.

Controlling and Measuring the Process

  • What tools does the vendor have to manage consumer accounts and report collection results? Those who offer web-based access to their clients can share their progress and track results in real time.

The more you know about the A/R process and your vendor’s capabilities and technologies up front, the more successful your outsourcing endeavor will be.

Apex Contact Center Solutions offers comprehensive Accounts Receivable Management solutions that integrate seamlessly with our clients’ current operations to help them capture more receivables, reduce write-offs and expedite cash flow.