That meant, among other things, that Burkhard launched an intensive training effort, comparable in many ways to the training that had backed up his highly successful sales staff. "We developed scripts for everyone so there would be a general uniformity to our approach," he says. The scripts, which were modeled after those used by Burkhard's salespeople, spelled out how to approach clients in a "customer-friendly" way. Direct the conversation toward a clear objective, in this case the collection of overdue funds, and respond to customer comments or problems. "Then, just as we do with our salespeople, we prepared our new collection clerks for real-life conversations by doing role-playing," which included tape-recording their simulated conversations with delinquent payers. These were followed up with a group analysis of what had worked and what hadn't worked during the conversation.
Always conscious of the intensely competitive environment in which The Placers operated, Burkhard made certain that collection staffers projected a customer-service orientation. "All we started doing was the same damn things we'd always done in the rest of the business," he says. "I'd just never seen the point of using those techniques in our accounts-receivable department before."
Customer communications. "Once I analyzed our existing system, I realized that we had always handled the up-front end of our billing process very poorly," acknowledges Burkhard. Among other things, the company never bothered to explain its payment terms to new customers.
Here's the new process Burkhard instituted: within 15 to 30 minutes after every new sale (which at The Placers generally amounts to a call from a business that needs temporary personnel that day), a customer-service representative calls the customer back, says Burkhard, "to go over the order, in a very service-oriented way and explain our payment terms." Among other issues, the rep clarifies which person within which department should receive the bill and asks new clients for credit references.
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Reference checks. In the old days, The Placers checked customer references so infrequently that they provided virtually no line of defense against deadbeats. "Maybe we'd get around to checking a company after three or four weeks," admits Burkhard, "but by then, if there were problems, we were already in the hole by thousands of dollars, because we'd be laying out money every week for our temps' salaries."
Now, new client's references are checked, and checked quickly. Customer-service reps ask for both bank and vendor references during that initial telephone call. The Placers' accounting clerks immediately make follow-up calls to all references, checking out the company's financial health as well as payment history. The Placers does its reference checks by phone, not mail, since Burkhard wants to identify problem payers quickly enough to be able to pull his temps off the work site at a minimum loss to the firm.
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Invoicing and follow-up. The only part of The Placers' accounts-receivable system that Burkhard didn't bother to change was the actual bills. "Ours are pretty clear," he says. "They describe the job we filled, the number of hours worked, the billing rate, and total amount due."
Here, Burkhard concentrated his own efforts on revamping The Placers' follow-up procedures, which had been poor to nonexistent in the past. "We'd wait two or three months or even longer before bothering to investigate why a payment was late," recalls Burkhard. "And sometimes after all that waiting, it would turn out that the problem was something we could have fixed quite simply on our end. Maybe the company had a question about one temp's time card or performance but was holding up all our payments until that particular problem could get resolved." These kinds of payment delays were unnecessary, since it was simple for The Placers' customer-service reps to isolate any charge in question and issue another invoice with payment due immediately.
Now, the company doesn't bother to wait for payment slowdowns before making follow-up calls: Burkhard's employees check in with customers less than 10 days after invoices are mailed. "That's a straight customer-service call," he explains. "They make sure the customer was satisfied with our temp's performance and look for any red flags that might indicate payment slowdowns."
During the course of the conversation, employees ask when The Placers can expect payment. "Getting the client to commit to a date is useful, because it tells us exactly when to schedule our next follow-up call, if we don't receive the payment when we expect to." Cynics might expect an endless stream of "the check is in the mail" conversations, but that hasn't been The Placers' experience at all. "The combination of our new customer education up-front and our follow-up calls after billing has convinced most companies that we're serious. Since most of these companies are our regular customers, they realize it's in their own best interests to pay in a timely fashion." Thanks to effective follow-up, The Placers has also experienced fewer customer-service problems -- probably another reason clients are willing to pay on time.
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Companywide cooperation. Burkhard's biggest change was to make accounts receivable a major priority for his entire organization. Employees now understand that sales without collections are worthless, and they act accordingly.
"Our accounting department coordinates its activities with sales, customer service, and other key departments," reports Burkhard. "That's done, first and foremost, through the flow of information about how much money collections brought into the company, which customers are slow payers, whether any new accounts are credit risks, and so forth." Every week, for example, Burkhard and his department heads receive aging schedules, which categorize all outstanding invoices according to whether they are under 30 days, 30, 60, or 90 days overdue.
