MAL 11/16 | Page 72

CREDIT MANAGEMENT ARE YOU AFRAID OF OUTSOURCING DEBT COLLECTION FUNCTION BECAUSE OF LOSING CONTROL! By Wasilwa Miriongi I n the last Article I talked about the importance of Cash flow to your business and more often than not cash flow issues arise in credit administration because of lack of well coordinated collection function with stages that a debt passes through to eventual collection. Blaming customers for non-payment may be the easiest for any company to do, but actually, that should not be the case where you have a well defined credit policy. Credit Managers always say “A sale is not a sale unless it is paid for”. It is not difficult to know that Bad Debts can be crippling to a business of any size in today’s volatile market. Chasing debts can be difficult and sometimes an impossible job for any credit department. Sure, taking a proactive credit management approach especially having a credit policy in place will help you avoid many problems associated with late payment. Unfortunately, it is inevitable that at some point you will run into a client that is facing bankruptcy or simply refuses to pay an invoice due to a dispute or cash flow problems. In these ‘‘Just like the Bible says every man is a potential sinner, every business large or small as long as they use credit as one of their tools of trade, will have a collection issue. Despite their best efforts, some accounts will fall in arrears. Some customers simply will not pay. And, like a rusted bolt, they are just not going to budge. So they reach out for a tool with added torque to get things moving. An outside collection agency will do.’’ 70 MAL 11/16 ISSUE situations, it is necessary to identify these troubled accounts quickly and to escalate them to a debt collection professional, sooner rather than later. Just like the Bible says every man is a potential sinner, every business large or small as long as they use credit as one of their tools of trade, will have a collection issue. Despite their best efforts, some accounts will fall in arrears. Some customers simply will not pay. And, like a rusted bolt, they are just not going to budge. So they reach out for a tool with added torque to get things moving. An outside collection agency will do. One company that I approached to offer debt collection services put it bluntly that that they do not hire external debt collectors, yet my own internal research told me they were owed millions of shillings they were struggling to collect. “I am afraid to outsource my potential bad debt because I do not want to lose control over my customers.” quotes like these are so common in business circles that I am compelled to comment that is purely based on believe systems rather than prudent