HOW DO YOU KNOW IF YOUR STAFFING FIRM HAS A CREDIT AND COLLECTION PROBLEM

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:

CREDIT AND COLLECTION PROBLEM FORM

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
First Last
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:

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

Submit a request">Wilson Cole is President of Adams, Evens, & Ross, a Commercial Collection Agency
Exclusively for the Staffing and Recruiting Industry. Wilson can be contacted at
800-452-5287 Ext 6578 or you may email him at Wilson@aercollections.com

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HOW DO YOU KNOW IF YOUR STAFFING FIRM HAS A CREDIT AND COLLECTION PROBLEM