How do you know if your staffing firm has a credit and collection problem?

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HOW DO you KNOW IFyour STAFFING FIRM HAS A CREDIT AND COLLECTION PROBLEM

Wilson Cole

Owners of staffing firms repeatedly ask, “How do I know if my staffing firm has a credit and collection problem?” To respond, I asked our credit risk department at Adams, Evens & Ross to create a test to rate a staffing firm’s exposure to credit risk. The department was thorough and produced the following evaluative tool:

1. Do you have a written credit policy in place?: *
2. Do your new customers fill out a credit application?: *
3. Do you have safeguards, such as the right to charge interest, late fees, or collection costs, built into your credit application?:
4. Do you check the credit application?: *
5. Do you re-review the credit application every 6 to 12 months?: *
6. Do you write off more than 1% of your annual sales to bad debt?: *
7. Do you have a collection process in place?: *
8. Do you set credit limits?: *
9. Do you require Personal Guarantees to be used with companies younger than 3 years old?: *
10. Do you contact overdue clients before they are 30 days past due?: *
11. Do you file a UCCI to become a secured creditor on your accounts that have credit lines over $20,000?: *
12. Do you allow sales people to set credit limits and/or collect their own accounts?: *
13. Do you check public records for lawsuits?: *
14. Have you had more than one client file for bankruptcy within the last 18 months?: *
15. Do you have a liquidation clause on your timesheet stating that they owe a fee if they hire your temp?:

Name: *
Phone: *
Email:: *

Now, let’s see how your company’s doing. Add up your score. If you tally 8 points or less you’re probably in pretty good shape. If you totaled 9 to 14 points you may want to improve some of your processes. If you scored over 15 points you are at high risk and your accounts receivable is a nightmare poised to happen.

If you would like a free video CD on How to Turn Your Credit Application into a Credit Contract, e-mail your name, address, and phone number to request@staffingdebt.com and a member of my staff will send it out to you free of charge.

REFERENCE:

1. Do you have a written credit policy in place? Yes= 0 No = 3
2. Do your new customers fill out a credit application? Yes= 0 No = 2
3. Do you have safeguards, such as the right to charge interest, late fees, or collection costs, built into your credit application? Yes= 0 No = 3
4. Do you check the credit application? Yes= 0 No = 4
5. Do you re-review the credit application every 6 to 12 months? Yes= 0 No = 2
6. Do you write off more than 1% of your annual sales to bad debt? Yes= 0 No = 2
7. Do you have a collection process in place? Yes= 0 No = 2
8. Do you set credit limits? Yes= 0 No = 3
9. Do you require Personal Guarantees to be used with companies younger than 3 years old? Yes= 0 No = 3
10. Do you contact overdue clients before they are 30 days past due? Yes= 0 No = 2
11. Do you file a UCCI to become a secured creditor on your accounts that have credit lines over $20,000? Yes= 0 No = 5
12. Do you allow sales people to set credit limits and/or collect their own accounts?
Yes= 4 No = 0
13. Do you check public records for lawsuits? Yes= 0 No = 2
14. Have you had more than one client file for bankruptcy within the last 18 months? Yes= 4 No = 0
15. Do you have a liquidation clause on your timesheet stating that they owe a fee if they hire your temp? Yes= 0 No = 2

Wilson Cole is the founder and CEO of Adams, Evens & Ross, the nations largest credit and collection agency design exclusively for the staffing and recruiting industry. In 2008 he was inducted into INC Magazines, “INC 500” for being the CEO of Adams, Evens & Ross, the 307th fastest growing privately held company in America. This exclusive group of other INC 500 CEOs includes Bill Gates of Microsoft and Larry Ellison of Oracle.

In 2007 Recruiting & Staffing Solutions Magazine’s Editorial Staff named him “ The Billion Dollar Man” due to the fact that he had collected or helped his clients collect more than 1 Billion dollars in past due debt over his career of almost 20 years as CEO of Adams, Evens & Ross.

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