Advanced Collections Management cheat sheet

Collection policies and strategies

• A general collection policy is the organisation-wide framework, such as the escalation timetable and authority limits; specific policies tailor it to particular product lines, customer segments or risk categories.
• Some policy tools must not be applied universally: aggressive early escalation that suits a high-volume consumer portfolio can damage a valuable, otherwise-performing trade relationship.
• Strategic collections design reviews the whole credit cycle, because credit granting standards, invoicing accuracy and payment term design all shape how collectible a receivable turns out to be.
• Outstanding receivables tie up working capital and, once provisioned or written off, reduce reported profit, so a strategic collections function quantifies that cost to justify its resourcing.
• Collections work is structured either by account size and complexity or by collection stage, balancing specialist skill against cost.