Everand Logo

Welcome to Everand!

  • Discover millions of ebooks, audiobooks, and so much more with a free trial

    Only $11.99/month after trial. Cancel anytime.

    Ca$h is Fact: Implementing a Credit and Collections Policy From Application to Payment and Beyond
    Ca$h is Fact: Implementing a Credit and Collections Policy From Application to Payment and Beyond
    Ca$h is Fact: Implementing a Credit and Collections Policy From Application to Payment and Beyond
    Ebook242 pages2 hours

    Ca$h is Fact: Implementing a Credit and Collections Policy From Application to Payment and Beyond

    By Michael Funk

    ()

    Read preview

    About this ebook

    Ca$h is Fact lists various credit tools used to establish the creditworthiness of potential customers. Each tool is then broken down as the reader is taught how to interpret information provided in order to determine if a potential customer is creditworthy. The goal of a sound credit policy is to weed out companies who are bad credit risks while offering credit terms to companies who are good credit risks.

    Ca$h is Fact also demonstrates proven effective collection methods a creditor can use to ensure timely payment. The reader is taught the importance of establishing good relationships with their customers and how to work with their customer when payment problems arise. The goal of an effective collections policy is to ensure prompt payment. Effective methods of maximizing payment when a customer refuses to pay or simply cannot make payment are also explained to the reader.

    These tools and methods are summarized and written in a simple easy to follow format that will guide the reader in writing their own credit and collections policy. This policy will fit the culture of any company and help achieve company goals. There is no other book that details the application to payment process like Ca$h is Fact.

    This book is broken up into three parts: credit investigation (gain), collections (maintain) and writing the credit and collections policy.

    LanguageEnglish
    PublisherMichael Funk
    Release dateDec 24, 2012
    ISBN9781301176502
    Ca$h is Fact: Implementing a Credit and Collections Policy From Application to Payment and Beyond
    Author

    Michael Funk

    In fifteen years working in the credit and collections field the author of Ca$h is Fact, Michael Funk has helped write and implement credit and collections policies from large Fortune 500 companies to small finance companies. Michael is a seasoned credit and collections professional who has experience working with various types of industries in America and overseas. Michael believes that strong results are an important part of business. Key components to his success are diligence, proactivity and building strong relationships. Michael has been instrumental in saving millions in potential losses while helping to increase cash flow by millions of dollars. Michael is currently in the front lines of the business world helping to rebuild the economy one customer at a time by using all of the fundamentals laid out in Ca$h is Fact. The success of of these companies will ultimately lead to a successful healthy economy.

    Related to Ca$h is Fact

    Related ebooks

    Business For You

    View More
    View More

    Related podcast episodes

    Related articles

    • Article

      How To Get A Good Credit Score

      Oct 20, 2022

      How To Get A Good Credit Score
      4 min read

    • Article

      Banking/financing

      Sep 19, 2023

      Banking/financing
      1 min read

    • Article

      Digital Wallets Are Taking Off

      Nov 18, 2022

      Digital Wallets Are Taking Off
      9 min read

    • Article

      Tips On How To Choose A Credit Card For Your Business

      Oct 18, 2019

      The right business credit card is a valuable and versatile funding option for your small business. You can use one to manage gaps in your cash flow, earn points and rewards, and handle unexpected emergencies. Also, a business credit card will help yo

      1 min read

    • Article

      Financial Services in the New Age

      Mar 22, 2024

      Nearly every sector we know of is undergoing deep-rooted change thanks to rapid technological developments. The banking and financial services industry is no exception. In these changing times, where the use of Generative AI (Gen AI) is becoming wide

      2 min read

    • Article

      Are Debt Collectors Overcharging You? How to Protect Yourself

      Aug 25, 2022

      It’s tough enough trying to get ahead of a debt that’s gone to collection; it’s worse when a debt collector piles on fees, charging you extra to give them money. Yep, that’s right. According to federal officials, some debt collectors charge consumers

      3 min read

    • Article

      PhonePe: Life Beyond UPI

      Dec 10, 2020

      PhonePe: Life Beyond UPI
      5 min read

    • Article

      The Profit Multiplier Strategy + Innovation

      Jun 26, 2019

      The Business Tornado, driven by the four buyer forces unpacked on page 4, is further impacted by a business landscape littered with low-growth or no-growth markets that are impacting the ability of companies to deliver sustainable profits. Profitabil

      2 min read

    • Article

      How to Build a Credit History

      Oct 3, 2019

      Most lenders expect you to have a decent credit record to qualify for a loan or credit card. But if you've never had a credit card or taken out a loan, you don't have much of a credit history. It's a conundrum that young people face as they begin the

      4 min read

    • Article

      The Bnpl Mania

      Jan 7, 2022

      The Bnpl Mania
      13 min read

    • Article

      How David Beats Out Goliath

      Jul 18, 2023

      How David Beats Out Goliath
      2 min read

    • Article

      Independent Wealth

      Nov 4, 2019

      Independent Wealth
      2 min read

    • Article

      Beyond Microfinance

      Mar 4, 2021

      Beyond Microfinance
      4 min read

    Related categories

    Reviews for Ca$h is Fact

    0 ratings

    0 ratings0 reviews

    What did you think?

    Tap to rate

    Review must be at least 10 words

      Book preview

      Ca$h is Fact - Michael Funk

      Ca$h is Fact

      Implementing a Credit and Collections Policy From Application to Payment and Beyond.

      By Michael Funk

      Smashwords edition, copyright 2012

      License notes: This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please purchase your own copy. Thank you for respecting the hard work of this author. This ebook has been copyrighted.

      For Laurie, Rachel and Amy

      This book is dedicated to Tom Sayles who made me the credit professional I am today and taught me that no matter what Cash is Fact!

      Contents

      Chapter 1: INTRODUCTION: Cash is Fact

      Business Today

      True Story

      Part 1: Gain

      Part 2: Maintain

      Part 3: Putting it Together and Writing Your Policy

      Part 1: Gain

      Chapter 2: The Credit Investigation

      The Credit Application

      Examining the Credit Application

      Trade and Bank Reference Request Forms

      Trade Reference Form

      Bank Reference Form

      The Importance of the Bank Reference and Addressing Red Flags.

      Chapter 3: Various Reporting Agencies and Guarantors

      Dun & Bradstreet

      Business Summary

      History and Operation

      Payments

      Banking and Financial Statement Section

      Public Filings and Bankruptcy

      Personal Guarantor

      Personal Financial Statement

      Credit Reports

      Reviewing Credit Reports

      Corporate Guarantor

      Other Credit Investigation Tools

      Chapter 4: Financial Statements

      Financial Statements

      Publically Traded Companies, Colleges, Municipality and Nonprofit Companies

      Auditor’s Statement

      Financial Statements as a Credit Investigation Tool

      Chapter 5: The Credit Decision: Approval or Denial

      Making a Good Credit Decision

      Alternate Sales Terms

      Secured Creditor & Unsecured Creditor

      Refusing Credit and The Equal Credit Opportunity Act

      Denial

      Approval

      The Credit Investigation Policy and Chapter 14

      The Approval is now your GAIN

      Part 2 Maintain

      Implementing the Collections Policy

      Chapter 6: Customer Set Up and Billing

      The Contract

      Introductory Call

      Payment Methods

      Storing the Customer’s Information

      Invoicing the Customer

      Customer Statements

      Chapter 7: Building relationships through Collections, Disputes, and Chargeback’s

      Collection Calls; Who and How

      Collection Call Progression

      Credit Hold

      Alerting Management and Sales

      The Default Letter and Demand for Cure

      Wrapping Up Collections

      Chapter 8: Types of Customers Red Flags and Working with Customers

      Types of Customers

      Be Pro-active and Red Flags

      Working With the Customer Toward a Solution

      Solutions

      Chapter 9: Resolving Disputes and Chargeback’s

      Disputes and Chargeback’s

      Three Problem Solving Components

      Customers Still Refuses to Pay

      Chapter 10: Suits, Liens, and Jugements

      Exhaust All Collection Avenues

      The Collection Agency

      Secured Creditor Filing Suit

      Unsecured Creditor Filing Suit

      Small Claims Court

      Suits, Judgments and Liens

      Collecting on a Lien and Judgment

      Wage Garnishment

      Chapter 11: Bankruptcy

      Bankruptcy

      Chapter 7 Bankruptcy

      Chapter 11 Bankruptcy

      Preference Payments

      Reclaiming Funds on a Recent Transaction

      Bankruptcy Discharge

      Bankruptcy and the Collection Policy

      Chapter 12: Delinquency Reporting

      The Delinquency Report

      Increasing Net Worth

      The Format of the Report

      Maintaining the Customer

      Part 3

      Chapter 13: Implementing the Credit Investigation Policy

      Gain

      Team Function and Credit Limits

      Credit and Collection Department Credit Limit Authority List

      Credit Tools & The Credit Investigation Checklists

      Approval or Denial of the Customer

      Communicating With the Customer

      Chapter 14: Implementing the Collections Policy

      Maintain

      The Contract

      The Introductory Call

      Collections and Contacting the Customer

      Working Toward a Solution

      Resolving Disputes and Chargeback’s

      Procedure for Filing a Small Claims Judgment

      Procedure for Hiring a Collection Agency

      Wage Garnishment Procedure

      Bankruptcy

      Delinquency report information

      Communicating the Collection Policy

      Appendix

      Source Notes

      Chapter 1: INTRODUCTION: Cash is Fact

      Business Today

      Being profitable and keeping your head above water in today’s business world is tougher then ever. As time goes on, the economy seems to get worse instead of better. The landscape of the business world has changed drastically over the last ten years. No matter what field or in what part of the country we reside, we are all affected. Receivables are slowing down and many companies can’t pay their bills at all. Companies have implemented salary cuts or reduced their work force in order to save money. Because of the economy, customer bases are dwindling and many businesses are looking to manufacture overseas because the labor is cheaper. Businesses are looking internally for ways to cut costs. Many companies hire firms that specialize in eliminating waste and increasing bottom line profit. It is the new way of corporate America. Businesses, small and large, need to keep up with the changing times. Companies need to tighten up, control costs and eliminate waste. There exists a way for any company to increase profit, lower write-offs, maximize receivables, increase net worth and minimize risk at a minimal cost. No matter what the industry, size or location any company can implement a credit and collections policy. A company with a strong credit policy will increase cash flow because they will only be dealing with strong companies who will be able to pay and pay on time. Bad debt and collection costs will be reduced because a strong collection policy will help cut down on late payments which will help avoid legal costs and charge-offs. Net worth will increase because less money will have to be reserved for customers who aren’t going to pay. Building a good relationship with customers utilizing this policy with also lead to additional sales and the cost to implement a credit and collections policy is minimal.

      Just because a sale is made and money is owed, doesn’t necessarily mean payment will be made. In a perfect world a service is performed (or material sold) a customer is billed and the product or service is paid for in the agreed amount of time. This is not always the case. Some companies may not have the recourses to pay for the product or service in a set time. Some companies may not have the funds to pay at all. Many times problems arise that may delay or hold up payments. A company that does not have a solid credit and collections policy, in this case, is losing money. Period. A sale isn’t a true sale until full payment for the sale is received. A company cannot utilize money made on that sale until they are in possession of the funds. A sale looks good on paper but until payment is received it is not a true sale. Only after payment is received is that sale a fact. Full payment or cash payment is FACT. CASH IS FACT.

      True Story

      Don owns a print shop that employs about 30 people. Don’s Print, the shop is named, had a net income of $200K last year. Don prints fliers, pamphlets and many other forms of print media. Business in the first three months of the year was very slow. At the end of March Don got a call from the head purchaser at a company called A&J Paints. Don knows of this company as they just opened up three new stores in the New York area about two years ago. They have six stores total in the tri state area. A&J requested over 200,000 flyers to be printed by Don’s Print for a massive newspaper and mail advertising campaign that A&J plans to launch in April. They also put in an order for 10,000 pamphlets they will use as handout in each of their six stores. Don eagerly took the order, sat down and computed the numbers. It would cost Don $20K (for supplies, manpower and other things) to complete this job. Don quoted the purchaser from A&J a price of $28K for the job on net 30-day terms. A&J happily agreed. Don sent over a contract quoting the price and terms which A&J promptly signed and returned. Don was thrilled as this is by far his largest job this year.

      Two weeks later the job was complete and the pamphlets and fliers were shipped. A day later the invoice was mailed to A&J.

      Five weeks later Don noticed that the $28K invoice was still not paid. He called A&J and left a message for their purchaser to call him back regarding the overdue invoice. The call wasn’t returned. Business picked up and Don was pretty busy for the next two weeks and the unpaid invoice slipped his mind.

      Eight weeks has gone by now and Don finally got around to calling A&J. He left 3 messages for A&J’s CFO since the purchaser was not calling him back. The CFO finally returned Don’s call. He explained to Don that cash flow was very slow and they could not pay the invoice. He asked Don to give him another two weeks to pay the invoice. Don asked if A&J could pay anything. The reply was no. Don reluctantly agreed to wait two weeks marking the date on his calendar. After the two weeks had passed Don still had not received payment. As he was picking up the phone to call the CFO at A&J he noticed on his desk a first-class mail envelope from the United States Bankruptcy Court. When he opened it up he was in disbelief. A&J, one week prior, had filed for chapter 11 bankruptcy. A&J’s lawyer was listed on the bankruptcy notice. Don called the lawyer to discuss the bankruptcy and the lawyer explained that A&J made some bad business decisions which ultimately led to bankruptcy. He said A&J hastily opened up more stores then they could handle. They expanded too fast and took on too much debt. Their liabilities were so large that they had no other choice but to file for bankruptcy. A&J’s debt was so bad and the business was so poorly run that A&J eventually had to close all six stores and liquidate their assets. All of A&J’s creditors lost money. Don did not recoup any of the $20K it cost to do this job. Don’s net income for the previous year was $200K. This job cost him $20K. That is a loss of 10% of the previous year’s net income. This loss put his cash flow for the year at a negative. This is a loss Don may not survive. Could this have been avoided if Don had a credit and collections policy implemented? Probably. If Don did his due diligence following a sound credit and collections policy he would have probably discovered that A&J was on the brink of financial ruin. He could have protected his business by selling A&J on alternate terms such as cash in advance. It is doubtful that credit terms would have been offered at all. Don could have avoided the $20K loss.

      In my fifteen years of working in credit and collections, I have spoken to many people in all types of companies ranging from two employees to thousands of employees. I was shocked by how many of these companies had no credit and collections policy. They had no way of determining if customers can pay them and no set guidelines on how to collect money from customers who were overdue or who were not paying because of problems with the sale of the goods or service. A company that offers credit terms to other companies that purchase from them must have a sound credit and collections policy in place. Don’t Printing did not have a policy in place and we saw what happened to him.

      Remember:

      A good credit and collections policy can increase profit, lower write-offs, maximize receivables and minimize risk.

      A sale

      Enjoying the preview?
      Page 1 of 1