Consistency Is Corporate Collections Key

February 1, 2005
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MUSKEGON — Jim Fields, collection manager for Rehmann Receivables, says technology has drastically cut the cost of third-party collections services and he sees a mild consequent trend toward outsourcing such work.

Nonetheless, he believes that before sending accounts to collections, businesses should consider tightening up their own internal collection procedures.

Fields was in Muskegon last week to help a client of the Rehmann Robson PM Healthcare Management Group review such procedures.

He told the Business Journal that tightening things up isn’t rocket science, asserting that many collection difficulties stem from fairly commonplace mistakes.

Fields said Rehmann Receivables — also a subsidiary of the Rehmann Group — consults with and collects receivables for companies from Muskegon to Detroit. Roughly half its practice, he said, involves hospitals and medical practices.

He said that Step I for the firm is to examine what a client does internally about the collections process. “And we also can provide some training for their internal people,” he said.

“We try to make sure they’ve got the right processes in place, and that they make sure they follow up and follow through,” Fields added. “It’s the simple things that add up to being an effective collector.”

The simplest thing of all, he said, is collecting accurate data at the outset.

“This is probably very often where our clients head down the wrong road,” he said.

“It’s very typical across the scale of all the types of clients we work for — the initial information that’s gathered isn’t accurate — and I mean right down to addresses and phone numbers.”

One place hospitals often get off on the wrong foot, he said, is in the emergency room.

“It’s very typical that often when somebody comes into the emergency room, the clerk there doesn’t ask if the address that’s there from three years ago is still correct.

“So they start off already with a problem,” Fields said. “And then when they send out a bill, it’s sent to the wrong address.”

But he stressed that ER clerks aren’t alone in making such errors.

In several business-to-business cases, he said, accounts sent to his firm for collections are resolved quickly, simply — and at needless expense — because nobody at the client firm ever bothered to find out the telephone number of the debtor firm’s accounts payable department.

“You’d be amazed how many times the (client’s) information gathering doesn’t even include accounts payable,” Fields said. “So if there is a problem, nobody even knows who to call until our people get involved and they know to ask those types of questions

“It’s the simple things that add up to being an effective collector,” he said.

“Accurate data gathering is about half the problem,” he added.

“The other half is that it’s a people business. You send out the second or third statements and somebody has to follow up on them. The phone call follow-up is definitely the most effective way.”

Collection calling is no fun, he said, but a businesslike manner is the way to pursue it.

“You work with people on a case-by-case basis, taking their situation into account. It’s very much like sales,” he said.

He said the key thing is for an office to have a good process in place and stick with it.

A firm also must decide how much time and effort it wants to spend internally on difficult collections.

“Part of the point we try to make to clients and potential clients is: ‘How much can you afford to spend internally to collect the stuff that’s difficult to collect?’ The more people that handle it, the more expensive it gets. Sometimes it’s more cost-effective to farm it out.”

He explained that some firms prefer to turn accounts over to collection at 90 days. “Some want to wait for six months,” he added. “Some want to send three letters and some have enough people internally that they will make a few phone calls.

“The calls are the key,” he stressed, “because most people will ignore the mail.” He also said that affixing little sad-face stickers to third-notice bills no longer is much of a motivator for slow-paying clients.

Fields explained that in recent years most medical offices have developed good collection procedures and that they stick to them consistently.

But he said one still encounters a fair number of practices where the doctor’s wife is the office manager … “and she only works Tuesdays and Fridays for two hours. And they have a $7-an-hour person that’s supposed to be responsible for all the billings and collections and scheduling and doing the insurance work.”

Dealing with some insurance firms that have a policy of trying to wait out claims can be a trial for some clients.

“It happens all the time,” Fields said. “The insurance company won’t do anything until it gets to collection. The insured is actually then the one that puts on the pressure on to get something done.”    

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