Devising the right collection strategy

Collection strategy is a plan of action to achieve receivable management goal. Collection strategy is different from collection tactics. Collection Tactics on the other hand are the techniques adopted as a part of action plan. Strategy for collection cannot be one size fit all; but unfortunately most organisation bucket them (called aging). The action that follows through is dependent on aging. While for retail customer (small value outstanding), this may work for cost effective reasons, it would not beneficial to so for corporate or high value customers. Collection strategy at the outset should define the objectives clearly – collecting regular dues, past dues, customer retention, reducing bad debts. Understanding the customer within the lifecycle of organisation & its relative importance is critical in finalising the collection strategy. Recent acquisition, repeat customer, high value transactions are some aspects which needs careful consideration. There are multiple strategies that can be adopted for collection of dues (could in isolation or in combination). To mention a few

Outstanding Profile Geographical concentration Product based

If a customer with a high outstanding default, then the cash flow of the firm will be stretched. It would make sense that such accounts are reviewed periodically for early warning conduct, rehabilitation action is taken to reduce losses & retain good customer.

Customer payment behaviour is also depended on profile (just bucketing them together for collection action may not yield desired result). A customer who is salaried has one credit & multiple debits. So if do not catch him immediately after the salary credit or get into his payment priority; you may lose out. For self employed it will be different story. Payment of debt is made from business cash flows. So understanding the business model and underlying cash flow is critical to design collection strategy (credit period, periodicity of billing, cash discount).

If you are collecting based on aging and have different people/agency collecting on it, various people may be visiting same location to collect from different customers which may not be cost effective. Sometimes it makes sense of use customer geographic concentration (clubbed with outstanding amount) to collect in fewer visits to lower expenditure & allow better relationship.

In banking, collection strategies are not similar for secured and unsecured product. It depends on asset usage, value depreciation or appreciating qualities. An earning asset if repossessed early may kill the cash flow cycle leaving only asset sale as escape route. A consumption loan left unattended early can become tricky to collect later. It is evident from above that collection strategies will have to be dynamic at times, need to be attuned to market realities and organisation needs.

It is pertinent to track impact of collections strategies on organisation growth and profitability. Use of proper MIS will allow people to monitor whether existing collection strategies are effective or calibration. A greater understanding of the market condition, customer situation & behaviour can help design right collection strategies enabling customer retention, collecting dues with minimum losses & at economical cost.

Managing conflicts

In every organization there will be conflicts. Conflicts can emanate from commercial contracts, process challenges, operational performance, staff attrition, and compliance & control issues. The conflicts can happen between different parties – individual & groups, internal & external (between departments, within departments, with customer, with vendor).
Conflict can happen for various reasons
Data related Value related Structure related
Managerial action also causes conflict
Incorrect communication, Not aligned in thought and action Leadership styles .

Conflict is some desirable – to raise pertinent issues or to motivate them for action. By and large though, it affects morale, lower productivity, and improper behavior creating problems for the organization. Conflicts need to be managed & addressed so that relationships are embedded & productivity, profitability is enhanced by motivated & committed staff. However, individual perceptions hinder conflict resolutions. Personal backgrounds, gender, past experience play an important role in fostering conflicts. Conflict can be managed through negotiation, mediation and arbitration. The focus of this article is on negotiation. The prerequisite of any conflict resolution is art of passive listening i.e. listening without bias and preconceived response. This helps in understanding other’s point of view from their perspective. city guide With passive listening & open thought, one can realize the difference between one’s position and interest (it need not be the same). Once the position and interest is clearly known, we should first go for fostering agreement of low hanging fruits (minor points of disagreement). This will form a foundation of trust to handle the critical differences. On key points of divergence, one has to show a degree of flexibility & patience for possible conflict resolution. Conflict is more of an emotional issue than a logical issue. One way to get an agreement is to provide alternate solutions. It is seen if one approaches with a single solution, it is likely to be resisted (even if logical), while there is generally an agreement when multiple options are provided. The key points which stick out for agreement need to evaluated based on BATNA (Best alternative to negotiated settlement) and WATNA (Worst alternative to negotiated settlement) Not necessarily everything will be agreed upon in couple of sittings but it requires perseverance, openness of thinking & commitment to resolve. There should an action plan with timelines to implement what has been agreed upon & not made a pre-condition for next round of negotiation. This helps in building trust & inching towards the goal. Eventually, both sides should feel comfortable with the final solution if the agreement is to be considered win-win.

Delivering unique customer experiences

Creating a Unique Customer Experience is a process or framework for building an organization’s capability to deliver a distinctive customer experience that defines the brand and drives profitable growth. Customer experience encompasses every customer touch point with the brand, whereas the service is just a component of it. It starts with hearing about the company & its product and ends when product or service is delivered.
Unique customer experience should be





Actions and beliefs that hampers good customer experience

If the company loses touch with customer wants and need.

When employees don’t demonstrate ownership of the customer touch points

Expecting what has been built is good enough for customer satisfaction.

Lack of clarity or consensus within the organisation on what unique customer experience means

Losing sight on focusing on the right segment – customer profitability

Levers to be used for creating unique customer experience

People - quality of people who are empowered & committed, responsible & accountable, having longevity in the organisation will the key differentiator

Process – it needs to be customer oriented and not internally focussed. It should focus on speed, quality, ease & range of service.


Technology – a lot of customers today prefer self-service leveraging technology than needing physical assistance; more so for routine queries.

Brand – quality service enhances brand value while establish brand presupposes quality service (fast & reliable as well).

Steps for creating a unique customer service experience.

Map out the entire customer experience life cycle to appreciate how the company interacts with the customer.

Do a customer profiling of target market to understand their needs and preferences


Reach out to existing customer and prospects who didn’t take the product/service and listen what they have to say about their experience (good and bad).

Identify a compelling idea which can differentiate the company rather than being viewed as a commodity in a crowded market.

Check out companies in different & similar industry which are known to provide good customer experience

Link it to tangible business result or metric

Train employees to overcome customer experience pitfalls.

Customer experience is an end of end process starting with appealing to the customer need, interaction during delivery of service and ending with nurtu local directory website loading speed test