See Peter Hattaway's 15 seconds of fame talking about the New Zealand No Asset Procedure [Jul 28, 2008]
Why bring Hattaways in to provide advice and assistance on credit management matters?
As I write this in the last week of January 2009, the pressure is on credit managers. Many can see that the survival of their business depends on them, but the situation, in terms of the economy, is unprecedented. They need all the help they can get. Is their thinking correct? Are there ideas that haven't occurred to them? Are there policies or procedures or strategies or tactics or performance measures, or something which could improve their results? That's where I come in. In the last few days two credit managers who have previously only used Hattaways for training have told me they intend to recommend to their chief executive or general manager that they bring me in to provide consulting advice.
In this same week, I spoke to a collection call centre manager - just a follow-up call to see how things were going after I'd done some work for them in November 2008 - and found that he was buzzing about a change that he had recently implemented. "I've been asking for this change ever since I've been in the job," he said. "Then you come in and write a report, and 5 minutes later, it happens!" His CEO was blown away, he said, by the results they were getting.
It was a nice example of another of the benefits of bringing me in as a consultant, even for, in this case, a business that had a strong credit management focus and sound credit and collection processes. The credit manager may have known the right thing to do, but lacked something - skills or credibility or time or experience - that was needed to make the case convincingly.
The typical credit manager or credit controller handles day to day credit management. That's not the work we do. However, sometimes there are bigger issues and bigger problems which can benefit from greater and broader experience and expertise. In situations where there is a significant challenge, and/or where there is a significant cost if you get it wrong, and/or where it's important to get to the right answer quickly (rather than by trial and error), or simply a project which will take time which your credit manager doesn't have, you bring in someone else who can help. Examples of recent assignments are set out on this page.
In some cases, of course, we are brought in because, if the business gets it wrong, it risks liquidation.
Over the course of hundreds of assignments and 15 years of teaching, researching, and writing about credit management, we have seen and solved a lot of credit management problems that most credit managers of most businesses haven't seen. In fact, we're often called in after a business has tried to solve the problem itself and failed. (Or in one case, after both the business itself and one of the leading accounting firms had both tried and failed.) The reality is that credit management, like sales and marketing, is something of an art. It's easy to get processes, procedures, policies, systems, performance measures, (etc, etc) very wrong. How much is it worth to your business to get it right first time? The easier, safer, and, in the long run, much cheaper option is to involve us.
At the heart of our most interesting consulting and training challenges lie credit management needs and problems which the business concerned has realised it can't easily solve. If your business has such a problem, call us - 1800 127285 (from Australia) or 0800 128500 (from New Zealand), or email peter@hattaways.com
Collecting debt in a recession
At the moment, many businesses are struggling to collect debts. There are new challenges ahead. Most of those working in credit and collections were not there during the hard years which followed the 1987 share market crash, and this recession looks as though it will be tougher. When your customers are struggling to pay, and simply sending them all to debt collectors is not the answer, what do you do?
Contact us - 1800 127285 (from Australia) or 0800 128500 (from New Zealand), or email peter@hattaways.com. If it turns out that your credit team is doing everything as well as it can possibly be done, it won't take us long to work that out. If there's room for improvement, we'll find it.
Articles on surviving the credit crunch
Credit management during hard times (MG Business, 26 May 2008)
For the first time in our company's history, our board is paying attention to credit management," one credit manager told me last week.
The Olympics of credit management
In normal times, by my rule of thumb, the average trade creditor gets
about one bad debt for every 200 customers on credit terms for an
average write-off of about 0.5% of credit revenue...
Collecting from the hopeless
Last year I found myself in the unusual position of trying to fix the
problems of an Indian call centre. A client had had a large credit
management call centre in Sydney...
Peter Hattaway, Director
Some examples of interesting recent credit management assignments
Case 1. A business was very successful and had risen to a dominant position in its industry. However, its credit management was not a strength. Its small customers had always used it as something of bank. Now, a new CFO was trying to change the credit management culture of a business which didn't change easily, and whose customers strongly resisted the change. This type of "change of credit culture" is something we have seen many times before, but the staff involved didn't know how to handle it. We provided training for the staff and advice on minimising the distress for all involved.
Case 2. A commodities trading business knew a lot about dealing with risk, but not so much about credit risk, some of which was only "contingent" credit risk. In simple terms, if the market moved, a counter-party that had committed to a contract at a certain figure might find that what it had bought was now only worth half that. The difference in price might be $500,000. If that happened, there was a risk that they wouldn't pay, or couldn't pay.
Two groups within the business were at loggerheads over how to manage the risk from a corporate governance perspective. The CFO called in a large accounting firm to break the deadlock but found their solution unconvincing, so called in Hattaways. Our solution was put to the board of directors and became policy.
Case 3. A business knew that to survive it had to move into a different market. However, the new market had higher credit risk and the business's existing collection structures and processes - the way they had always done it - might not cope. They planned a review. However, they needed someone from outside of the business who understood the way this sort of debt was handled elsewhere and could help them to fit it into their relatively unusual business model. It called in Peter Hattaway to provide that independent view.
Case 4. Flaws in a company's billing process meant that the rates for some customers were interpreted wrongly. Often the errors were only discovered years later by which time the customer owed tens or hundreds of thousands of dollars. At that point the company tried to back-bill the customer. The process of talking to these customers and resolving the matter was haphazard and largely unsuccessful. At best, the company achieved solutions which were not consistent with the solutions reached for other customers.
The company needed a process which was fair and consistent, took into account the potential public relations and legal issues, and collected as much of the millions of dollars outstanding as possible. Hattaways provided a report which set out such a process.
Case
5. After a great deal of preparation and training, a large Australian
creditor moved its collection call centre to India. It soon became
apparent, however, that although the call centre was collecting about
the same amount of money as the
Sydney collection team had, but upsetting customers in droves.
Listening to calls, we found that about 15% of calls resulted in an angry customer, a very high percentage which was badly affecting the morale of the collectors. It also turned out that the new team was only capable of collecting "easy cases"; they had no skills for collecting hard debts. We were able to identify the major issues, and develop a solution which involved a combination of scripting and training. Peter Hattaway travelled to India. Over a period of a week, he and a manager from the company concerned put the 80 or so collectors and managers through some additional training. Improvements were immediate and dramatic.
The type of issues that people look for outside assistance on, and which we have advised on
- Our credit management operation isn't working well - what can we do to collect more money? How can we upset our customers less? How can we collect more money without upsetting and losing our customers?
- The big strategic issues - re-engineering the credit process, should we be giving credit at all? Should we be doing our own credit management?
- Advice on choices on software, outsourcing, collection agencies, staff, sale of debt, etc, and documents relating to RFPs and the selection process;
- The writing of credit management policies, procedures and scripts for credit teams and call centres;
- Planning and implementation of the integration of credit operations following mergers and takeovers;
- The centralisation of collection operations;
- Design of invoices, statements and reminder letters;
- Automation of billing processes, credit approval processes, collection processes, and processes for repossession and sale of repossessed goods;
- General review of credit and collections processes to improve results (in terms of reduced bad debt, increased retention of customers, lower operating costs, improved cashflow, etc) and give confidence to senior managers and boards of directors;
- Review of draft credit-related legislation for government;
- Drafting of credit terms and the practical application of the law relating to credit management:
- Advice on insurance claims in relation to credit management and expert opinion for legal action;
- Sundry papers on matters as diverse as ethics in credit management, the use of credit cards, and late payment fees, mentoring and support for credit managers;
- Keynote speakers for conferences and a wide variety of training associated with change in the credit process.
For further information email peter@hattaways.com or phone 1800 127 285 (Australia) or 0800 12 8500 (NZ)