Customer Service Key To Credit, Collections

In preparing for BCCA’s upcoming Media Credit Seminar, I was reminded about the value of forums in exchanging ideas for improving business practices. We may have a growing number of social media tools that can also be used to exchange ideas, but, let’s face it, the conversation gets a lot more interesting, in-depth and informative when you’re in the same room. 

That’s what happened when the industry’s credit and collections experts gathered for Media Finance Focus 2010, the annual MFM/BCCA conference, back in May. Although it was one of those “you really had to be there” situations, I’ll pass along some of the insights that our attendees were able to bring back to their companies. 

Providing good customer service to advertisers yields better DSO ratios and fewer collections issues

DSO — day sales outstanding, a key metric used by financial managers and analysts — is defined in MFM’s Understanding Broadcast and Cable and Finance, Second Edition: A Primer for Nonfinancial Managers, as a calculation that divides the total accounts receivable by the average net sales per day. The resulting number represents the average days of sales remaining unpaid from advertisers (or subscribers). 

As you would expect, a company’s credit and collections managers also use DSO as the barometer for the effectiveness of their departments. And as Bob Rollins, corporate credit and collections manager for Raycom Media, explained, we can improve our DSO by applying the skills we expect from our customer service representatives. Rollins, a former MFM and BCCA board member, moderated a Media Finance Focus session addressing the challenges facing organizations that have centralized their credit and collections functions. 

Perhaps no one best personifies that focus on customer service as well as Belo’s Steve McIntosh. His official title is VP and general manager of Belo Advertising Customer Services. McIntosh’s team has implemented a number of operational improvements to shift the perception of the credit and collection department from “credit prevention department” to being an account rep’s greatest ally in providing excellent customer service to advertisers. Measures such as streamlining and automating much of the credit application process and involving ad sales in ongoing monitoring of their clients’ risk profile have reduced the time required for providing credit approvals and created a transparent and consistent credit and collections process. 

Aiding those efforts are tools such as BCCA’s industry-specific credit reports. BCCA is the only source for media-specific credit reports, which serve as one of the benefits of BCCA membership.

Applying consistency to the process shouldn’t be confused with being inflexible. As Cheryl Szluzer, financial operations manager for the Columbus Dispatch, advised conference attendees: “It’s not a black and white world.” Strategies such as requiring cash in advance or automated payments can be used to accept business from an advertiser that doesn’t measure up to company-wide standards for a creditworthy account.

At Raycom, Rollins championed an effort that dramatically reduced the number of invoice discrepancies cited by ad agencies. A by-product of centralizing the credit and collections function is the increased dependence on sales account executives to enter the purchase orders. By getting the company’s electronic invoicing vendor to include training for sales AEs as part of its service agreement, Raycom was able to ensure CPE (client, product and estimate) codes were being entered correctly, reducing a major cause of the discrepancies. Now that’s a great example of where better customer service directly improved DSO.

BCCA Media Credit Seminar

These are just a few instances of the experiences and insights shared by credit professionals at the Annual MFM/BCCA conference. They also represent an illustration of the type of knowledge and ideas that will be shared when the industry’s credit and collections managers gather for the BCCA Media Credit Seminar. Scheduled for next Tuesday (Nov. 16) at the McGraw-Hill Building in Manhattan, the event’s sessions and presenters include:

• An update on bankruptcy and other legal issues affecting the media industry’s credit and collections practices, presented by Bruce Nathan, member, Bankruptcy, Financial Reorganization & Creditors’ Rights Group at Lowenstein Sandler PC.
• A discussion of best practices for managing the receivables process for new media enterprises moderated by Scott Jenkins, director, customer marketing and sales within the controller’s department for ESPN, and featuring a case study presentation from Melissa Mabry, sales operations analyst, Disney Customer Marketing & Sales.
• A review of the unique issues involved in establishing credit and credit policies for emerging media moderated by Greg Frost, credit and collection manager for LIN Media.
• A session addressing accounts receivable management from a strategic perspective, including A/R management’s role as an integral part of the quote-to-cash process, tested products that have worked to improve the process and A/R management case studies presented by John Salek, VP, business services, Genpact USA.
• A discussion of new credit ideas, including an analysis of the use of credit scores and how credit scoring models can benefit media credit departments, presented by Mark Kohls, VP, business development at Commercial Credit Reports.
• A presentation on the growing use of trade credit insurance for transferring risk and enhancing borrowing facilities by Michael Kornblau, U.S. trade credit practice leader for Marsh Inc.
• A discussion on effective strategies for credit card management by Rudet Fountain, national sales manager for United Tranz*Actions.

The full-day seminar will include breakfast, sponsored by Communications Credit & Recovery Corp.; a luncheon, sponsored by Szabo Associates; morning and afternoon breaks sponsored by Traxi; and conclude with a reception that’s being co-sponsored by Katz Media Group and Cox Reps. It will also feature an exhibit area showcasing companies that provide services and solutions for the media industry. More information concerning the Media Credit Seminar may be found on BCCA’s website.

Former MFM Board Member Robin Szabo, president of media collections firm Szabo Associates, recently reported that the current client turnover rate has climbed as high as 30% for some media companies.  When we consider the expenses involved in acquiring new customers — and ensuring they become longstanding, pay-on-time customers — participating in the BCCA Media Credit Seminar is one of the best investments companies can make toward improving those relationships. 

We hope you or your credit professional will join us in New York for insights from leading credit and collections experts and your peers on the best strategies for achieving those outcomes.

Mary M. Collins is president & CEO of the Media Financial Management Association and its BCCA subsidiary. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.