Get the Credit Department Onboard
Collections wouldn’t be needed if there was not credit granted so it is particularly important to have the credit department as an ally when creating a strategy to prioritize your collections.
Ideally, your credit department utilizes an internal score system based on multiple factors when evaluating credit limits and approvals. Using an internal scoring system as opposed to relying solely on credit bureau scores can give collections better insight on how a customer will behave in the future based on their past.
The credit department’s role should extend beyond determining initial credit and should include a regular review of existing customers. Customer reviews should be done at a scheduled interval depending on the nature of the account, balance and industry. Common reviews may include:
• Credit bureau scores
• Financial reports
• Original references to get updates on their pay history
• Personal visits to high-dollar customers
Once updated information is collected and reviewed, the credit department should reassess the customer’s internal score to determine if the maximum credit, payment terms or payment method appropriately matches the customer’s associated risk. This information should be shared with the collections department so they can adjust their approach accordingly.
The credit department’s updates will help arm the collections department with the information needed to prioritize collections. Therefore, a collaborative relationship between the credit and collections departments is essential!