Friday, 12 September 2014

Dialing For Dollars – On Steroids!

The accounts receivable department is a very busy place – processing credit applications, limit increase requests, sales inquiries, processing and posting payments, and of course making collection calls. If your list of customers on your Aged Trial Balance is quite large, you may never get to the end of your customer call list before its time for another month end.

If This Sounds Like You – You’re Not Alone.

Many credit professionals have the same challenges. If the customer were to call, you could find the time to talk; however the reality is that the smaller balances do not get the same treatment as the larger ones. One solution could be to hire another credit analyst to make those calls if you have the time to train and budget for it.  Another common option, if your system allows for it, is to send your customer a system generated demand letter.

No Extra H/R Budget? Here’s a Cost Effective Option

If your system is capable of exporting customer data such as telephone numbers, customer account number, and customer name, we can create an automated telephone call campaign using a custom pre-recorded message. Thousands of calls can be completed each day. The message asks your customer to call your office or they have the option of speaking to a live operator at your company. You maintain complete control of the customer experience with all funds directed to your office.

Bottom Line

Custom calling campaigns have produced some amazing results. Clients report a payment in full rate of up to 50% for much less than the cost of another employee. Sales Managers report increased sales as a result of old accounts being resolved. And customer satisfaction results actually improve as customer issues are getting solved.

 If you are interested in deciding if custom calling campaigns are right for your business – give us a call today for a free review.

1-866-266-0117 Ext. 350

Monday, 8 September 2014

Recovering Your Collection Fees

To be able to recover your collection costs from a commercial debtor in the United States, you must have a valid signed agreement whereby the debtor has agreed specifically that the costs of collection are recoverable.  

A version of this clause may look something like this:
“The customer shall pay all solicitor's fees and expenses, and all legal costs as between solicitor and his own client on a full indemnity basis, as well as an allowance for the time, work and expenses of the Credit Grantor, or of any agent, solicitor or employee of the Credit Grantor, for any purpose herein provided for and whether such sums are advanced or incurred with the knowledge, consent, concurrence or acquiescence of the Customer or otherwise, together with interest thereon at the rate provided for herein, shall be repayable to the Credit Grantor on demand, or if not demanded then with the next ensuing installment payable to the Credit Grantor.”


Where these costs are recoverable, often the courts decline to add the total amount of the collection costs and/or contingent fees in the event you decide to sue your customer.
Funds paid for court filing fees, service of documents, etc.  are legally recoverable are added to the final judgment amount.

The Reality of Recovering Collection Costs

Notwithstanding the legalities, what are the chances of recovering collection costs from your slow-paying customer?

As with any business transaction, if you have a signed agreement where the customer has agreed to your terms and conditions, the chances are more favorable than if you do not.  Sometimes it may take court action to facilitate the recovery of collection fees.  It is only possible to enforce a legal contract through the courts.  Reputable and ethical collection professionals will not visit a debtors business premises to force payment of the collection fees.

At AAB, our approach is to recover all principal and interest charges on an amicable basis.  If the creditors agreement with its customer contains the required clauses to hold the debtor company liable for collection fees, then we will work to obtain those expenses as well.

Should your customer balk at paying these fees, they may be used as a negotiating tool to encourage prompt remittance of the principal amount of the debt.


When pressed, some debtors will agree to pay the interest expense, especially if they want to work with the creditor again in the future; however if there is no signed agreement to pay interest or collection expenses, the debtor will not pay them.

Thursday, 4 September 2014

How to Hire Top Shelf Credit Staff

In most small and medium sized companies the accounts receivable clerk was recruited from the accounting department and got the job by accident. If you were to ask these credit clerks if they actually enjoy their work – most will answer with a resounding NO! Employee turnover in this position is extremely high.

Low Job Engagement = Big Problems

If you check out the help wanted ads they are chock-full of employers looking for credit and collection personnel. We regularly see advertisements for the same companies every month. Turnover in any employee position is expensive; however the turnover of credit and collection staff can be exponentially more expensive if not caught and corrected right away.

Untrained Staff Managing Your Largest Asset?

So how do you attract and retain quality credit & collection staff? It all starts with your advertisement. Workopolis, Monster and Career-Builder are popular help wanted sites. Firms like Robert Half and Mercer Bradley can help you with recruiting as well. Increasingly sites like Craigslist and Kijiji have become excellent sites to post your advertisements.
Your advertisement is critical. Be specific about the job expectations. Post the salary or the hourly wage. Let people know exactly what they can expect. Pre-qualify candidates to make sure they possess the qualities of top credit and collection professionals.  There are several pre-employment tests that can be administered to help you short-list candidates for this specific position.

Ounce of Prevention vs. Pound of Cure

Once you have posted your advertisement, pre-qualified your candidates, and given thoughtful consideration to the job requirements – you are ready to make an employment offer. Attracting and retaining the right credit and collection personnel is critical to your firm’s financial success. Don’t leave it to chance otherwise you can expect the same results with your accounts receivables.

Need Help? No Time?

If you know you need help with your accounts receivable, we can help you draft an advertisement, test candidates and provide you with a short-list of people that actually want to work in credit and collections.


Call us today at 1-866-448-3936 for a free consultation and don’t leave your financial results to chance. 

Sunday, 11 May 2014

Cash Flow Is King

The number one mandate of any business is to survive. This mandate supersedes any other.  An organization must generate enough cash flow to meet its obligation such as payroll, taxes, and payment to trade suppliers and avoid being insolvent.

During negotiations with many debtor companies, the #1 response we typically hear is “We had tons of orders- I don’t understand why I’m in trouble”.  These “successful” business people become insolvent because they simply didn't have enough cash to meet operating expenses, including the added cash requirement that increased sales generates. Without adequate cash planning these debtor companies were not capable of meeting payroll and the purchase of raw materials to meet the sales demand.

With any business the cash cycle looks like this:

Cash is used to buy raw materials or pay for services rendered in the production of the final product or service. The sale of the goods or services produces cash and accounts receivables. When customers pay their bills, the accounts receivable goes down and the bank balance increases. Unfortunately the cash doesn't usually come in the same month as the sales generates.

If a business finds itself short of cash, the options are:

  •       The owner can inject more cash into the business.
  •       The business can use a pre-existing bank line of credit.
  •       The business can slow its payments to trade suppliers.
  •       Sale of fixed assets.
  •             Sale of non-current inventory.
  •             Issuance of company stock.


One of the easiest methods of raising some fast cash flow is to ensure you are collecting money from your credit customers in a timely matter. Your collection efforts should include a systematic and consistent follow-up. This is vital to the establishment in the credibility of your credit terms in the minds of your customers. Time is of the essence when credit and collections are concerned. To be effective one must follow-up diligently. An accurate, timely report of your aged trial balances is crucial to the efficient control of collections and release of new orders.


Putting a customer’s order on credit hold is an excellent way to get their attention. Prompt contact with your customer in a professional, tactful manner usually produces the desired effect. Make sure you respond quickly when your customer pays his account to make sure there are no delays with their next order. 

Friday, 4 April 2014

Trust - But Verify

The Value of Validating Your Customer & Supply Chain 


     The phrase “Trust-But Verify” comes from an old Russian proverb. Ironically in the 1980’s it was a favorite mantra of Ronald Reagan.  Wikipedia defines it as: a form of advice given which recommends that, while a source of information might be considered reliable, one should perform additional research to verify that such information is accurate, or trustworthy.

     Back when I was a kid and just got into the receivable management business, I had a boss that used this phrase all the time – and it drove me nuts! Today we have staff in two countries and thousands of clients and can now tell you unequivocally that he was right. Trust your customer but don’t be na├»ve. Trust the information on the new credit application but complete your due diligence check list anyways.

It’s All About Risk Management


     Trusting your customer and vendors is important in business. Validating that your customer and vendors are capable of fulfilling their obligations is of equal importance – maybe even more so.

 So How Do I Trust But Verify?


     There are many ways to satisfy yourself that your client and vendors are capable of doing good consistent business with you. If possible, we recommend visiting your customer or vendors place of business where practical. Have a look around.  Is the yard busy? Does the stock on the shelves look current? What’s happening at their loading dock? Do the employees look busy? Are the phones ringing?
All these indications are good signs of the level of activity that your client or vendor is operating as a going concern.

What If You Can’t Visit?


     If the physical location of your client or vendor makes it impractical to do a premise visit, we recommend retaining the services of a credit investigation firm that maintains the ability to obtain information not readily available. They should have access to corporate records, land titles or deed information. They should have access to construction project data. Additionally they ought to maintain the capability of performing reference checks on trade suppliers and obtaining a bank check. It should be simple to use an investigation firm. Look for a vendor that provides online access and is equally easy to call on the phone.

Surprises are for Birthday Parties – Not Your Business


     In negotiations, information is power. Access to reliable current data on your customer and supply chain will help you to plan and source alternate suppliers if appropriate. Don’t get caught with no place to sit when the music stops.



About the author:  Brad Lohner is a Director of the PCR Group of Companies which owns Priority Credit Recovery, a Canadian commercial collection agency and AccountAdjustment Bureau, Inc., an American commercial agency. The PCR Group also consists of Lien-Pro – Canada’s only Construction and Builders lien filing firm, and Credit Process Advisors – a strategic credit management and accounts receivable outsourcing firm. Priority Credit Recovery and Account Adjustment Bureau are authorized agents of Lumbermen’s Credit Group, a construction and mercantile credit bureau with access to data throughout North America. 

Saturday, 8 March 2014

Staying Out of The Doghouse

In the receivable management world, we see the good, bad and ugly of both business and human relations. While we have touched on this topic before. we believe it is a good time for another review. Let's review the secret to good business.

When I was a kid, my dad had a saying whenever I got into trouble. He would say “What are you in the doghouse for this time?”  As we work through our clients disputed receivables and consult with prospective clients, my dad’s question still rings in my head. Approximately 40% of the cases assigned to our firm in the last 24 months have not been a result of the customers inability to pay, but rather a dispute with delivery, quality, supply chain disruption, unfulfilled promises...and the list goes on. In these situations our firm acts more as a mediator than professional debt collector.

There is a way for creditors and their customer to stay “stay out of the doghouse” and that is to not be afraid of tough conversations. Addressing tough issues head on without your pride or ego getting in the way is difficult. For some, admitting mistakes is tough. Creating an environment where staff and customers can fess up to mistakes can be equally challenging. Trusting your boss to not crucify you for making a mistake can be tough.

So What Do You Do?

A young Jewish man was once quoted by his friend John as saying “… the truth shall make you free.” As was true over 2000 years ago – the same is true today. Phone your supplier or customer and admit you screwed up. While the recipient may not like the message initially, they will come to respect you for admitting the mistake.

Taking this approach will accomplish two things:

1)      Position yourself as a person or company of integrity, and/or;
2)      Establishing yourself as someone who can be trusted during a difficult negotiation.

Managing Expectations

The best way to position yourself as a person or company of integrity is to talk about the “tough stuff” up front. As mentioned earlier, if everyone did this, 40% less receivables would end up in third-party collections and business relations may be stronger than ever! The best way to minimize these troubles is to do your due diligence on your vendor supply chain and customers at least once each year. Check their credit rating, review their warranty claims, review their track records.


If you need assistance with the due diligence process contact our business partner Credit Process Advisors Inc. to obtain information such as credit information, bank checks, Mechanics Lien information, law suits, and receivable monitoring.

Thursday, 13 February 2014

Managing Your Receivables for Top Performance

There are certain key performance indicators (KPI’s) that any business can implement to significantly increase its odds of not only surviving but help it to thrive.

Each segment of your business, including your credit department, should have its own sub-set of KPI’s to ensure your cash flow is optimized while managing costs. 

Here are the compelling reasons to carefully manage your accounts receivable:

  •  If one maintains a systematic method of managing accounts between 30-60 days past due, you should see an 85% reduction in accounts aging past 60 days.
  •  After 60 days, the probability of collecting your account is 80%, at 90+ days, it slides to just 70%
  • If allowed to age past 90 to 180 days, the chances of a full recovery are now 54%!

So what steps can you take to maintain control of your receivables?

         Know Your Customer - Paretto’s Principle holds true in most companies that 80% of your revenue is generated by 20% of your customers. Segment your customers by assigning codes. For example:

A.      Best customers, great margins, pays within terms, few service issues.
B.      Bread & butter clients, consistent orders, no price haggling, pays no later than 45 days,
C.      Complains about everything, many warranty issues, stretch payables for a long time, takes unauthorized discounts. Customer you wish you hadn't met.
D.      Dead. These are customers purchased from you once and you haven’t heard from in a long time.

    Start the Collection Process Early - Sometimes all it takes is an automated email reminder, or a copy of a statement, that can get the job done. This is the first step in helping to classify/segment your customer base. When the early reminder doesn't elicit a response, these are the customers that may require personal contact. Always make contact with these customers no longer than the mid-point of your first past due period. For example if your terms are 30 days- make sure you personally contact your customer at day 45. Studies indicate that personal contact at this stage of delinquency can reduce that number of customers reaching 60 days, by as much as 85%.

     Follow-Up – If your receivable still remains unpaid by this point, and there’s no diligent follow-up, then you have effectively given your blessing to be paid sometime after 60 days. Talk to the right person at your customer’s office who can sign a check. Get a firm commitment as to a date when the funds will be received. Confirm your understanding of the arrangement while you have your customer on the phone and again via email right after you hang up.

     Pull The Trigger – if by 120 days you still have not received payment- it’s time to take further action. This is the point where most customer-service oriented creditors blink as this step can be uncomfortable. If an individual runs out of money – you can still collect from them when they get back to work. 

                                    If a company runs out of money – it’s dead.

At this point we recommend a Ten Day Demand letter be sent advising the customer that unless fall payment is received by a specific date, their account will be placed for collection.

To make the decision to take action easier for creditors, the Third-Party Collection industry has developed a Ten Day Demand letter which creditors can use free of charge. It works like this:

·         Letter sent to customer on collection agency letterhead giving the debtor ten business days to remit full payment directly to the creditor.
·         If the debtor pays the bill within the ten day period, there is no charge to the creditor.
·         Should the debtor pay only a portion of the bill or nothing at all, then their account rolls into the regular collection process of the collection agency. Funds paid after this date will be subject to your pre-determined fee agreement.

All creditors, who use this service, like the certainty that they made the right decision at the right time. If the customer fails to remit – then it was the right time to hire a third party.


To learn more about our Ten Day Demand System, CLICK HERE and fill out the form. 

Monday, 13 January 2014

Credit Literacy for a Young Person You Love

Generally our focus is on commercial debt and commercial transactions; however in this issue we will be discussing credit and financial literacy for high school students.  Take this home and have a discussion with your own children or someone you care about.

Some of our community involvement activities centre on personal credit issues. We provide a credit seminar to local high schools. It is part of the Career and Life Management program (CALM).  There is only a paragraph dedicated to credit and its use in the textbooks. As older consumers will attest, there is much more to be learned about the subject and it would be great if it didn’t have to be learned the hard way!
Here is the seminar outline that we use:

Credit is defined as: confidence in a purchasers ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.

Examples of credit: cell phones, gym memberships, library cards, student loans, Visa, MasterCard, store credit cards, utilities.

How do you get credit? 1) Capacity – Cash Flow (job)
                                       2) Character – Attitude
                                       3) Credit worthiness – Payment habits
                                       4) Conditions – Layoffs (bad economy)

Cost of Credit:

Examples of common credit issues: roommates, cellphone bill, gym membership

How long do I have to fix the problem? Generally 90 days to pay all arrears.

Collection Agencies – What happens if I don’t pay?

Bankruptcy – A Credit “Mulligan”

Budgeting - Importance

Q & A

It has been our experience that gym memberships, cell phones, and roommates are the most common reasons a young person will have credit troubles. Have this conversation with the young person and explain to them the responsible use of credit and how it will either help or hinder them in the not too distant future. A great credit rating opens up many possibilities whereas a poor one can hold you back for a long time

Friday, 10 January 2014

Priority Credit Recovery Inc. and Account Adjustment Bureau save US Producer with Innovative Solution.


PCR received a collection account from one of their Multi-National Canadian clients for over $100K against a USA Producer.  PCR engaged their USA subsidiary Account Adjustment Bureau. The documentation consisted only of invoices, a name and number.

An investigation was conducted; the debtor was contacted who admitted to receiving and selling the product. There was no dispute. They cited poor financial planning and cost overruns as the cause for non-payment. They could not pay and legal action appeared to be the only recourse. It was clear to PCR/AAB the debtor needed to restructure, increase profitability by lowering production costs, plus they needed better equipment.

A solution was proposed by PCR/AAB and accepted by the client and debtor. PCR/ AAB drafted a loan agreement, incorporated Personal and Corporate Guarantees, interest and a fee structure for the service. The debtor converted the payable to a term loan, which enabled them restructure, obtain capital financing, increase profitability and expand their market share. The client converted the receivable to an investment asset and continues to do business on a COD basis.


The supplier and producer continue to have a mutually profitable relationship. USA/Canadian International Relations improved with this innovative solution proposed by highly trained professionals who went outside the box.  

This example is proof that PCR/AAB professionals look beyond the obvious when collecting a debt.