Most companies have an in-house collection system in place, which they use to track the status of collection efforts on overdue invoices. This approach works fine until the in-house collections staff forwards receivables to third-party collection agencies for more aggressive collection efforts. At this point, the company has no way to update its receivable information, short of calling each agency and manually updating information about each invoice. Though this solution may be sufficient for companies with a small volume of outsourced collection work, a more automated solution is needed for higher-volume entities. Here are some solutions that improve the flow of collections information back to the company:
- Allow collection agencies on-line access to the corporate collections database. Though this approach does result in the use of a single corporate database, as well as no need for additional staff data entry, it also presents several problems. First, collection agencies may obtain access the to company’s entire receivables database, including information about other receivables and collection agencies. Also, the company must provide training to the collection agency, and also runs the risk that any data entered will be inaccurate. Further, because of the company’s training investment, it will be more likely to use only a few collection agencies, rather than trying out new ones.
- Obtain on-line access to collection agency databases. This approach creates more labor for the company, which must extract data from collection agency systems and manually update its own database with this information. This approach also requires a learning curve, which will force the company to use a very small number of collection agencies in order to learn fewer systems.
- Use an internet-based hosting service. A third-party hosting service accepts data feeds from the company, in which the company specifies which collection agencies are to be given each invoice, and then sends a notification e-mail to each designated agency. Agencies also send update feeds back to the hosting service, which are then available as data extracts that can then be ported back to the company’s collections database. An example of such a site is www.youvegotclaims.com, which is run by Automated Collection Control. Fees are based on the number of claims sent to the hosting system.
- Manage your own hosting service. A company doing a sufficient amount of business with collection agencies can use a variation of the last bullet point, and create its own web-based hosting service. By doing so, it makes selected collection data available on the Internet to its collection agencies, and provides them with data entry screens that they use to update collection status – which is then ported back into the company’s collections database.
The last approach is the ideal one, but only for larger companies. The relevant solution will be the one most cost/effective to a company, given the volume of its collection activity and the nature of its in-house collection systems and technical support.