Tighten Up Your Credit/Collection Practices

Last week I was in New York visiting members and prospective members. We also hosted a New York-area networking event. I really enjoy these opportunities to talk with the media industry’s finance professionals; they really help me keep in touch with what’s important now.

One of the topics that kept coming up was credit and collection. The consensus seems to be that, outside of the credit team, no one pays much attention to the topic until the economy turns for the worse or there’s a high-profile default. The rest of the time, it’s out of sight, out of mind.

For the past several years, we’ve made credit and collection the special report in the March/April issue of our member magazine, TFM (The Financial Manager). This year, in addition to our regular “Credit Where Due” column and Edward Mockus’ piece about credit practices for programmatic and digital, we included an article by Szabo Associates’ C. Robin Szabo entitled “Turning Nuts and Bolts into Gold.”

Given the conversations I had last week, I believe Szabo’s recommendations deserve a wider audience, particularly those that involve staff outside the credit department. After all a poor DSO ratio (days sales outstanding) not only affects the amount of money that needs to be borrowed to finance operations, it also reduces the company’s, or location’s, perceived asset value and can lower compensation across the board.

Take A Systematic Approach — Payment terms and conditions should be included on each sales contract and all parties should be clearly informed at the time the agreement is made. Organizations must also make it easier for their collections managers to take a systematic approach toward a delinquent account by helping to ensure they are armed with accurate and up-to-date account activity information when contacting the debtor.

Cultivate ‘The Attitude’ — While all collections professionals believe “I am owed the money; therefore, I will get the money,” it’s important to maintain the right mindset when speaking with the client. This means not losing control or sight of the intention.

Be Clear And Concise — Both sides of a conversation with the debtor must be simple and direct. This requires avoiding complex or nonspecific words that can be interpreted in more than one way and requiring a specific response and commitment from the debtor. For example, a “check’s in the mail” response should be followed up by asking when and to whom the check was mailed, the check number and the amount. Likewise, a promise of payment must include a date and amount certain.

Watch Out For Change — Everyone should remain on the lookout for changes like slower payments, a change in payment habits, broken promises of payment, a postdated or not-sufficient-funds check, requests for a hiatus or cancellation of a contract in mid-stream. It’s also important to monitor any changes affecting the debtor’s business behavior in general, including the sale of merchandise at unusually low prices, growing too rapidly, changes affecting consumer perceptions of the company and financial developments such as refinancing or changing banks.

Seek Inside (And External) Cooperation — Sales personnel have direct and regular contact with customers, so frequent meetings between credit and sales personnel can provide very beneficial for communicating information concerning a slow-paying or non-paying accounts. In addition, account reps can make personal contact with the debtor if credit’s initial attempts are unsuccessful. Credit teams can also draw from external resources, such as BCCA’s credit reporting services.

For example, BCCA’s industry-specific Media Whys service analyzes how advertisers and agencies are paying other media companies and provides reporting of collection filings, tax liens, judgements, corporate linkage information, payment trends, along with trade data from D&B or Experian.

Know Your Limitations — The timely use of a third party can substantially reduce aging losses, resulting in fewer write-offs and higher profits. While an account is typically turned over to an agency after 90 days, debtors become candidates for immediate transfer when they have “skipped,” broken promises, claimed disputes that are unfounded or shown offense at being asked for the money.

Learning Never Ends — As with any profession, continuing education is important for ensuing the best results. Educational resources for credit professionals include the National Association of Credit Management, the New York Media Credit Group and BCCA, a subsidiary of MFM representing credit and collection professionals from more than 600 TV, radio, cable, digital, out-of-home, newspaper and magazine organizations in the U.S. and Canada.

To that end, members of MFM’s BCCA Committee have planned a full track of educational sessions addressing the nuances of media credit and collections at the upcoming Media Finance Focus 2017 conference, which will be held in Orlando, Fla., later this month. In addition to these formal discussions, the 57th annual conference for MFM and BCCA will continue its long-standing tradition of providing a forum that allows newcomers and longtime veterans to meet and exchange ideas.

Those traditions include medium- and discipline-specific roundtables and the opening night event sponsored by Szabo Associates that for many years has been heralded as the time when someone new to the industry or the practice of media finance truly begins to feel at home.

But make no mistake about it, with an agenda of nearly 100 general and breakout sessions featuring presentations from more than 150 of the foremost experts on the most pressing cost issues and revenue opportunities, this is the only educational event specifically designed to meet the needs of the media industry’s finance professionals.

We hope you’ll consider joining us. Regardless of your current role, having a better media finance focus is guaranteed to improve the prospects for both your company and your career.

Mary M. Collins is president and CEO of the Media Financial Management Association and itsBCCA subsidiary, the media industry’s credit association. She can be reached at[email protected] and via the association’s LinkedIn, Twitter, or Facebook