Business Article

 
Sales Success Principal   By Brian Flynn
Know and speak the language of your client Founder Receivable Consultants International, Inc.

 

Unlikely a surprise, the ‘Sarbanes- Oxley’ Act of 2002 has had a great deal to do with how commercial finance and accounting departments function these days. Its presence is undeniable to all of us in the receivables service industry. And while this RCII article is designed for the “Collection Sales Professional,” agency administration, collectors, and customer service professionals should also benefit from this information as they conduct their functions.  Simply put, everyone in your company should know and speak the language of your clients and prospects. Don’t misunderstand me here; I am not suggesting you become an expert on the topic of ‘Sarbanes-Oxley’- only that a baseline  familiarization will serve you in achieving more succinct messaging as you conduct your selling activities and articulate that all important “WHY” working with your company is the best decision- for every client and prospect alike. It will definitely help you develop more aligned service offerings and provide insights on how to better connect on a more global level with your clientele.  

Before I get started it is appropriate to offer a brief definition of the ‘ACT’ as foundation and insight for the points I will be making. You will also be given helpful links to find (expert) detailed research on the ‘ACT’ should you be so inclined. Please keep in mind, this is my definition and should not be taken as legal advice, nor be considered the most accurate or perfect expression of the ‘ACT’.  Again my purpose here is to provide general understanding and a framework for your selling activities as they relate to our topic.  

Definition - The Sarbanes-Oxley Act of 2002 became effective in 2006. It was enacted following wide publicly traded security losses; due to management reporting inefficiencies and fraud. These cases have been reported in a number of highly publicized lawsuits (some criminal) against several securities companies, publicly traded corporations, as well as executives responsible for reporting the affairs of those traded securities. It levels significant penalties, financial and other, upon principals and management for non-compliance to its standards. Some privately held companies may also be held to the standard of the act.  

Reported in a number of F&A industry publications, many CFO’s (public and private alike) have responded to SOX (as it’s known in the industry) to influence higher quality internal communication, reporting and performance standards industry-wide - and not just here in the United States.  It just so happens that these internal components oftentimes are the source, of the uncollectible accounts our agencies are tasked to resolve.  

So, from my view the ‘ACT’ can be seen as a positive influence on account placements; whereas it tends to receive the ire of many who feel that it usually only serves to impede placements and requires additional reporting detail. Moreover, I recently viewed a whitepaper penned by CFO Research Services and Capgemini; two authorities in the F&A outsource service space. This important document details several discussions on the benefits derived by both ‘Outsourcing Clients’ and their ‘Service Partners’ now that compliance to higher reporting and governance standards is required.  

The expectation given was that those of us in the receivables industry who have the technology, processes and management vision will be in position to see sustainable growth in both 1st and 3rd party placements.  In fact, several contributors to the research reported “Cost Advantage” as their rationale for outsourcing. And nearly 70 percent anticipate a continuation of outsourcing – now proven to deliver positive impact on their profits.  

I know, we have been telling clients and prospects about the benefits of improving internal performance for years. But, it is extremely valuable for us to be able to point to objective research from respected analysts not among our ranks. Additionally, companies must look to themselves as much as the agency partners they hire, to understand why they are not collecting higher percentages of account placements.   

Another impressive piece of work by a company named Tripwire, which boasts that it works with several thousand corporate enterprises globally. The company’s expertise is in providing technology and consulting services.  Its paper, entitled “Sustaining SOX Compliance,” furthers the evidence that improvement of internal controls and information leads to an overall improvement in company performance. Again, my read is that these benefit both company profits and certainly should create opportunities for those of us in the accounts receivable services industry. Does anyone question how unprofitable poorly run clients are? I didn’t think so!  

Let’s sharpen the focus now to our level - we who sell collection and ARM management services to financial departments in virtually every industry around the globe. What does all of this look and feel like as we interact with existing clients and new prospects? 

Firstly, you are not alone in grappling with tougher client/prospect standards while making less progress on older sales messaging. In virtually every conversation I have these days, with everyone from sales professionals to agency owners, the chief lament is higher/lower volume on one side but nearly all say lower liquidation or recovery value in placements. This would seem to counter what we have said thus far and it would; unless of course we were in the throws of an extreme economic downturn. Which of course we are! In such a situation good decision making on the part of creditors - particularly in optimal timing of account placements, can breakdown, giving way to more reactive “Cash is King” thinking.  And we all know what is left when the remaining (uncollected) accounts finally show up on our doorstep.  

The economic crisis continues to play a major role in what we are seeing in terms of sales challenges and opportunities. “The combination of SOX, Corporate Governance and the Worldwide Economic Crisis have delivered the perfect storm to our industry”. I have no doubt that these significant events have forever changed the way we sell to and service receivables clients tomorrow, and into the foreseeable future.   

What you are seeing in your client and prospect dealings today include:  

  • More in-depth reporting requirements and delivery platforms for status and performance information.  “Vendor Management”.
  • Companies are expecting higher visibility of your actual work product, and probably an increase of requests for direct input on workflow activity and prioritization. 
  • Clients and Prospects are stressed, because they are expected to attend more management and staff meetings - taking them away from their core business activities. So they are likely very stressed when your visit or phone call is next on their day’s agenda. Don’t take it personally!
  • You are being introduced to Finance Team Members; who before all of this began to take effect, had never been seen or heard of. Many have no credit or collection backgrounds and (other than an occasional case related question) certainly are not involved with your agency in a primary contact role outside of the (once-per-quarter) performance review meeting.  People with titles like:

○ Internal Audit Manager

○ Cash Application Manager

○ Reconciliations Analyst

○ Accounts Payable Manager

○ Controller/Treasurer/CFO

COO

○ Contracts Admin.

○ Service Organization

○ Internal Legal

 

You get the idea. This is the new face of our client relationship a multidimensional approach to risk management. It integrates stakeholders not only vertically, within the Finance and Accounting silo, but you will also see members from other enterprise quadrants; enterprise groups we depend upon when pursuing defaulted customer accounts, within which we are seek documentation and other types of account history.  

Tip: This is actually exciting because it facilitates your efforts to achieve one of the most important and previously more difficult selling objectives…Selling Deep!    

We are also seeing an increased level in requests for information (RFI) and (RFPs). This process is a drive to help these decision making teams achieve Best in Class Standardization throughout the enterprise.   

A recommendation which I cannot emphasize enough to any collection sales professional is as follows:  Become as familiar as you can with this process as quickly as you can! It will be playing an ever increasing role in your future selling success.   

Understandably, you may not be feeling comfortable with all of this new control. I have heard and read statements by some in our industry who have said they feel like they have been conscripted into these new and more burdensome circumstances. Others have stated publicly that they feel as though they are viewed as a commoditized resource - one to be acquired, managed and controlled.  And there is plenty of evidence out there to support the feeling. I actually read a definition by one CFO who described his view of receivable service providers in that exact context.  

Personally, I think this attitude has been around a long time. New technology and processes seem to help these individuals support their narrow and somewhat uneducated view. That said, it would be wise to consider developing new messaging to address this thinking if you have not already done so.      

Remember, many of these decision makers have little if any expertise in recovering advanced level delinquencies or all the legwork that goes into producing the results they see.  Nevertheless, if you can develop the right messaging, even these managers can (on occasion) be enlightened and become quite loyal and profitable relationships. They are just tougher to convince.  The last thing I will say on this issue is that by far, the prevailing wisdom is that the collection agency of today (with all of its advanced technologies and business services and efficiencies) offers finance and credit executives more value as a business partner than ever before. And in many new service areas, agencies can deliver significant leverage in achieving enterprise-wide operational and profit performance - all, while delivering on the central mission of turning non performing receivable dollars into cash, and in some cases even rehabilitated processes and customers.  

At the end of the day and on balance, it is my view that while we are all feeling the effects of industry moving to become SOX-compliant in this perfect storm (SOX compliance, increased private company Governance-Standardization and the current Economic Crisis), we have the opportunity in some ways for the first time to re message our value and win greater business from our existing clients as well as new business from our prospecting activities.  

Summary recommendations:  

Seek out sources of information on the net and local bookstores on the Sarbanes-Oxley Act, to familiarize yourself. In so doing, you will gain new and valuable insights into your clients working environment.  Your interaction with prospects will benefit by your ability to initiate more relevant dialogue through more succinct questions and responses to their feedback.  

Incorporate the subject in your client and prospect visitations. It will separate you from the average competitor. Your visits will be energized with the value of being more than just a sales person who is looking for new placements, or by being just another agency who ‘claims to be on top of what is important to the creditor’.  

Find out if your company utilizes compliant technology and practices. If so, incorporate these facts into your sales and marketing materials and activities.  Based upon our search of agency websites, this will definitely set you apart.  

Use the opportunity of Client Teams, as your platform to extend your brand throughout each client’s internal community.  

Start viewing your clients as under-developed relationships. This will give you a refreshed paradigm and attitude. It will strengthen your brand throughout your clientele. It will surprise you to see how long term clients will pick up on the change and respond with increased placements and referrals.  

Decide that this new challenge is an opportunity to grow your personal success!

 

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Research Resources:  

Personal interviews with several C-Level finance and accounting professionals.  

Sarbanes-Oxley for Dummies-Jill Gilbert Welytok, JD, CPA.  

Sarbanes Oxley 101: FAQ  

Tripwire: Sustaining SOX Compliance  

Compliance: Finance’s Bridge to the Enterprise- CFO Research/Capgemini  

 

Brian Flynn - is an accomplished collection industry professional and consultant.  You can reach  Brian directly at:  

Receivable Consultants International, Inc.

22525 SE 64th Place, #227

Issaquah , WA . 98027

425-985-1099

brian@rciiseattle.com

www.ReceivableConsultantsInternational.com  

Copyright© 2012 Brian Flynn –all rights reserved.

 

 

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