TODAY I LEARNED EMPATHYApril 2, 2018
HOW DO YOU KNOW IF YOUR STAFFING FIRM HAS A CREDIT AND COLLECTION PROBLEM
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:
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 firstname.lastname@example.org and a member of my staff will send it out to you free of charge.
- Do you have a written credit policy in place? Yes= 0 No = 3
- Do your new customers fill out a credit application? Yes= 0 No = 2
- 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
- Do you check the credit application? Yes= 0 No = 4
- Do you re-review the credit application every 6 to 12 months? Yes= 0 No = 2
- Do you write off more than 1% of your annual sales to bad debt? Yes= 0 No = 2
- Do you have a collection process in place? Yes= 0 No = 2
- Do you set credit limits? Yes= 0 No = 3
- Do you require Personal Guarantees to be used with companies younger than 3 years old? Yes= 0 No = 3
- Do you contact overdue clients before they are 30 days past due? Yes= 0 No = 2
- Do you file a UCCI to become a secured creditor on your accounts that have credit lines over $20,000? Yes= 0 No = 5
- Do you allow sales people to set credit limits and/or collect their own accounts?
Yes= 4 No = 0
- Do you check public records for lawsuits? Yes= 0 No = 2
- Have you had more than one client file for bankruptcy within the last 18 months? Yes= 4 No = 0
- Do you have a liquidation clause on your timesheet stating that they owe a fee if they hire your temp? Yes= 0 No = 2