Credit & Collections: Payment Acceptance, Training and Staff Benchmarking

As we step into the third year of the pandemic, credit leaders agree that they have been on a roller coaster ride from bankruptcy waves, frauds, new laws, and staffing challenges to declining profitability. Join this session to learn how to benchmark your company against industry findings from the payments acceptance survey on A/R frauds, payment trends, risk mitigation strategies, staffing challenges, hiring trends, and more.
David Schmidt

David Schmidt

Managing Director, A2 Resources
Download Slides

Session Summary:

Takeaway 1
Customer responses and trends from payment acceptance survey

Key Points

  • Checks account for just over two out of every five payments received
  • ACH payments are expected to grow 28% over the next twelve months and be more popular than checks
  • Credit card and alternative payment acceptance are also likely to increase over the next year
  • The use of wire transfers looks to remain stable
Takeaway 2
Staff training should be provided in the organizations

Key Points

  • Soft skills help in better performance in credit and collection activities
  • Post-covid, there’s an increase in interest in portfolio monitoring and analysis
  • Only 50 % of the largest organizations reported having a credit department training budget
Takeaway 3
Key industry findings for staff benchmarking

Key Points

  • How to determine the accounts assigned and distributed to your credit and collection staff
  • Barely over 25% work from the office in the credit, collections, and receivables department
  • Other automation software solutions implemented by customers in addition to A/R software solution
  • There’s a fair amount of hiring, and lay-offs/eliminating positions have reduced considerably
Show More

David Schmidt: [0:05]
Thank you, Michelle. So, yeah, I’ve been in credit collections for a long time started out with Dun and Bradstreet decades ago. And then was a corporate credit manager. And then 94, I began a two resources, which is my consultancy, and began writing for credit today in 2004. So I’ve been doing it for a while. And one of the things I do there is handling the surveys. And so we’ve been doing a number of surveys, last at Radiance 2020. We talked about some of the recent surveys at that time. And that’s what we’re doing today, we’re going to talk about some more. Yeah, and here’s the platform for all Highako. So credit today as part of Highako Academy. And it’ll look at payments, staff training, and we’re actually currently running a staff benchmarking survey. And I’m gonna give you some preliminary results from that. So got another a few weeks for that to run. But we went in there and had to still had a couple 100 responses to look at. So we got some good trends that are coming from that. So in terms of payments, we wanted to look at payment acceptance, and the different types of vehicles that ways that customers are paying, or credit today, members. And so we found out a couple of things, one that checks in this is a survey that we had run in 2017. Actually, we’d run this one last year, I’m going to next one, so we had run this two years in a row. So it’s not a lot of there’s been a fair amount of change. And what’s significant is one of the things was that 40% of payments are by cheque. So cheques are no longer the dominant means of payment. So the paper that’s diminishing, it’s gonna, it’s diminishing slowly at this point. What’s increased greatly is the ACH payments. And those are expected to continue to grow. So actually, this was a look at the survey was done in 2021, and looked forward to what might happen in 2022. So this is the expectations that they had at that time. And we found that these expectations align with surveys that other people have done as well. The third area where we’re seeing a lot of growth is on the credit card side. And that’s actually become the fastest growing area in terms of credit card acceptance, to use for payments. So credit cards are becoming increasingly important. AP departments are increasingly pushing credit cards, they do that because they get a cashback discount on it. And they can actually make AP a profit centre by doing that. So we see a lot of corporates wanting to pay by credit card because of that. And, you know, trying to impose that as much as possible on their suppliers. So that’s some of the things that we’re going to start looking at with this survey. And actually, throughout this any questions at any time just raise them? So we’re going to ask you a question very simply. And we’ve got the little polling, do it raise of hands? Let’s do it as a raise of hands. So do you accept credit cards? How many do? Okay, so most of you how many don’t? Okay, and anybody not? Sure. Okay, so we’re good. So most of you 99% of you are using credit cards, we’re finding that there’s a number of things that we’ve seen some changes with credit card payments. So this is back to the previous survey in 2014, which is the orange, the blue and is 2021. So, credit card payments are still accepted over the phone by better than four out of five of you. So it’s this group shows that possibly even higher there. At the same time. The number of online credit card payments jumped by 86%. And so we can see this big jump online. What’s interesting is faxes dropping off. And so that probably accounts for a large part of it, except that we see in person and also via mail, we’re also dropping. So we’ve seen this shift to mostly most credit card payments down moving, moving over the phone or online. And that makes sense. So as we move on, so what are the circumstances under which you will accept credit card payments,

David Schmidt: [4:56]
and there’s some tracking the changes here says we’ve had previous surveys and the green is 2021 for last year 2014 Is the blue and 2010 is the orange. So what are the circumstances for accepting that, in terms of cash in advance, 85% are accepting credit cards, we hadn’t asked that question on the previous surveys? Using it for cash on delivery, so either a cod or point of sale, we see that that’s coming in, you know, this year at 85%. And that stayed relatively consistent from year to year, we see an increase though, down in that third area, you know, using credit cards for workout payments with seriously delinquent accounts. So, you know, that’s, that’s an important way to, to use them. And then also we see them payments on open accounts, you know, for orders being shipped on open accounts that that that’s increasing quite a bit and as moved up from 50 to 64%. And so, you know, that’s where we’re seeing, that’s where we’re seeing the growth really. And that ties in with what we’re seeing from other surveys and other sources. So that’s how credit cards are increasing. So a couple questions here. So on the left-hand side, is your payment, prompt pay discount offered to customers paying by credit card, so this has always been a, you know, item for contention, you know, I’m gonna give a prompt pay discount, and then they’re gonna hit me with the credit card, I’m gonna have to pay the fees on it. So 2%, all of a sudden becomes four and a half or 5%. And as you can see, almost half they know there was a well, actually, almost half don’t offer a discount. 43% say no. And just 11% said yes, on that. So it’s nothing surprising there. But it’s, you know, the fact that there’s even 11%, there might be a little bit surprising. But maybe what’s more important, is there a maximum amount? Customers may charge to a credit card, how much are you going to allow on credit cards, and here we’ve seen some, some changes again. So as you can see the you know, there’s been a shift from the 25 to 49,000, that’s gone down. Also, the under 10,000 has gone down, but it looks like everything’s accumulated itself in the 10 to 24,000 range. No explanation for why that’s, that’s happening that way, because in the meantime, the over 50,000, it’s stayed steady. Let’s see, we see companies shifting a little bit dumbed down some up and not 10 to 24,000 range. 25,000 range seems to be where people are getting comfortable with accepting credit cards, and then there’s the group that’s been comfortable and continues to be comfortable with it at $50,000 or higher. Please share with us the benefits from implementing a credit card payment system. increased customer satisfaction and convenience, as you can see tops the list and continues to top the list. Where I think you’ve probably heard from some of the other sessions, I know we heard it from Satoshi the importance of customer experience. And that’s, that’s really a theme in terms of when you’re looking for a proof. And so that’s interesting that that does come in high. And then the other thing is, you know, the payments improved approved collections. So they improving cash flow, but that’s dropped off a little bit. And reduction of CF DSL, same thing. They are dropped off a little bit from actually I’m sorry, they changed the colours on me. So those both increased the customer satisfaction on top slightly higher, only marginally payments, improving collections, a good amount higher from 68 to 77%. And then reduction in DSO

David Schmidt: [9:44]
of 4% jump there. So these are the key benefits that we see and that have been there in drops off. You know with increased sales. It’s somewhat helpful but then the others are marginal so That’s what we’re seeing with payments. So now let’s move into staff training. And we found some interesting things here. Soft skills, which we’ve defined as things like negotiation, communications, time management. And as you can see here by this chart, we asked people what three training topics are needed the most, and your credit and collections organisation. And soft, soft skills come in at the top with at 44% saying that’s what they’re, they’re looking for. And then the next item is also interesting is the portfolio monitoring and analysis. And that’s something that previously hasn’t been as high on your radar. But we’ve, we saw that you know, here that there’s an increased interest in that. And we think that might have been spurred a little bit by COVID, and then need to really take a look at the portfolio, as we all entered into that and rush to decide what we’re going to do. And it’s something that’s being pushed by not only HighRadius, but some of the other software vendors as well. So it’s an interesting trend to note in terms of portfolio monitoring, and there’s a lot that can be done. My personal pet peeve is that people don’t do enough of it. And that’s one of the areas I work in. And there’s a lot that can be done to understand where the risks and your exposures are in your portfolio. And then obviously, how to respond to those into up and up performance. And then number coming in number three, and is credit fundamentals. And some of that might be with new people coming into the area, causing a need for that. But, you know, it’s always good to remember the fundamentals and keep them as a priority. As we go down the list, the next few are worth noting the risk mitigation in this instruments, understanding what you can use is important credit scoring, and properly using credit scoring and understanding how to rank your receivables. And get real intelligence out of the scores, not using them as a one-off is important. And then collections financial statement analysis to do Mainstays and you know those so those seven items really, really form the top things that people are looking at. So this question asked what topics have been covered in the credit and collection related training you’ve received over the course of your entire career. So most people, collections, financial analysis, credit fundamentals, legal issues, bankruptcy, and quite a bit on soft skills, and then risk mitigation. So it starts dropping off there. But you know, pretty much everything that you would expect. And I’m not going to labour that. So take a look at this a little bit further. As we dig into it, what is your primary motivation for participating in additional credit and collection training, or professional development? As you can see, the largest area is professional growth. And so there’s an interest among you folks for that. Would everybody agree with that? Yes, professional growth is a big thing. But then there’s also this second biggest area 12% There is, you know, advancement says so salary and then moving up the corporate ladder. And those things obviously go together. Bread certifications, job requirements, management, connections, customer relations, those things, you know, all had a minimal impact. So what types of training does your organisation offer to its credit department employees sort of have to go the reverse on this chart and go from the bottom up. So most people it’s been extra external workshops and training. So things like that, things like this.

David Schmidt: [14:37]
You know, and even more, you know, one day type things was what we found most people were or that most training was going on. The online courses is a little bit over half, that’s where they got their training and got their professional development and credit and collections. And then the conferences, but actually conferences and external workshops somewhat the same thing, but a little bit different. So still a lot of attention to conferences. And then continuing education courses that might be might be offered elsewhere and college tuition refund. So, in house, not a lot being done. And so that’s, this is some of the information that’s helping guide us with Highako. Academy. So, question Does, does your company have a budget? Or credit department training? So let’s say raise of hands for yes. Okay, so we’ll call it a third. Be generous. How about know that you don’t have specific credit department training? Okay, another third. So, yeah, so it’s split? It’s, it’s a mix? And you know, and that’s pretty much what we saw. So, about a third. Yes. A little bit more said, No, we’re maybe the other way in here. And 25%? Not sure. Now, what’s interesting is a little bit of the budget. So what is your credit department’s annual training budget? And the range was typically 1000 to 100,000? Or is that skewed by a few people with larger budgets? But the median on that, which was more meaningful than the average was $5,000. And that’s consistent with what we see with the next question, how much training budget is allocated annually per employee. And the median again comes down to $1,000. You know, assuming several employees that 5000 Make in the 1000 makes sense. So the training budget for individual employees was anywhere from $200 to 10,000. So the 10,000 is probably the sum of the companies that were doing tuition refunds. We would assume we weren’t able to cross tab that though. And then. So we talked before about what type of staff training you had here is, you know, what type of staff training does your organisation now offer? So what’s available at this time, and that sort of gives us what you’ve had in the past is probably pretty much going to be pre-COVID. This is going to look at, you know, what’s going on at this time, as we move away from COVID. And we see the, you know, the external workshops, still important, and the most important. Online courses, still very much important. And then the tenants had professional conferences again, in the continuing education. So not a whole lot of change from the one to the other. So conferences like this, they’ll top the list and online courses. A close second. Yeah, let’s keep moving along, then. So on the staffing, is your credit department. Staffing adequate? Do you feel like you have the people that you need to staff, your department? So let’s see a show of hands on? Yes. Okay, and no. Okay. So again, it’s a, you know, probably a third, a third and a third. What we found out from the survey is, is your staffing adequate? The yeses lightly outnumber the nose. So that’s reflected in here as well. And then, coming 12 months, we asked you to see your department doing a number of things. So hiring new employees 38%. Staying with the same staffing level, you currently have almost 60% And then laying off employees in eliminating positions just under 3%. So a little bit of hiring going on, actually a pretty fair amount. But for the most part, people staying where they are and very few people laying off. And how do you determine how accounts are assigned and distributed to your credit? And collection staff? This is an interesting question. So as you see, we got to answers going a little bit all over the place. And, you know, there’s numbers of ways to divide up the portfolios. So there’s

David Schmidt: [19:41]
going to start with on the right hand, left-hand side by me. None so there’s only one person in the credit department so that was about 10% of our audience. So they’re handling the whole portfolio but when we start divvying it up between multiple employees. We see that a little over a third Are you know, we’re doing it based on the type of account or the distribution channel that the accounts are going out of. So you know, these are the wholesale accounts, or these are the distributor accounts, these are direct mail accounts, that type of thing. And then the second area is, is using geography. And one of the issues with geography, and that’s probably related to sales team alignment as well is, you know, it doesn’t provide you with any differentiation or specialisation, it gives you a Everybody spread across generally, you get all different types of accounts, you know, mixed together in your employee’s portfolios. And as you automate credit and collections, those are things that you’ve not been taking advantage of what the software can do for you in terms of workflows and an intelligence so interesting that a lot are not doing that. And then customer characteristics. This is where you can really get some specialisation and take advantage of it. We see about 25% doing that. And it’ll be interesting to see, as more people automate and do things, whether that number starts to go up further. Only 8% Did it alphabetically, which is probably even worse than doing a geography geographically alphabetically. It’s just, you know, it’s you’re assigning customers basically random again, but that’s take on these things. So as we continue this, in addition to your accounts receivable software module, or enterprise resource and planning system, have you implemented any of the following software automation solutions, so there’s an obviously Auto Cash is up there at 42%. So four out of 10, people have done that Customer Self Service service portal or electronic invoice presentment, and payment portals, you know, come in second there with well over a third. And then collection software. Again, almost a third of, of our respondents had implemented collection software, and those are probably three of the biggest productivity and performance efficiency impacts those three types of software solutions. So that makes a lot of sense. And then you can see the other things that were added there. So credit application process, just over a quarter credit analysis software. And this is where you could do the customer or portfolio analysis. There not quite 25% deduction management systems, which is more specific to specific companies at 14%. And then imaging, what a few have done imaging, which can be very helpful. And in just getting rid of the paper is really the enemy to process efficiency. And then some people needing the software doing a lot of UCCS and liens using that type of software. So we’ve got a really a broad mix of different software solutions being used. But, again, the top three are the three that we would have hoped and expected in terms of the impact that can have on your department. So last few questions. Does anybody in credit collections or receivables work remotely from a home office? And nearly three quarters? Have at least someone working remotely? Oh, only 25% barely over 25% have everybody in the office all the time. And so I guess the question, how many days a week are people working remotely? And you know, as you can see, there’s a lot of people in there with two or three days, add those together, that’s about a third. And then of the ones working remotely for five days. Nearly half are still fully remote. So quite a bit of remote work still going on. So one, I believe this is the last one what are the most important qualities you want to see in a job candidate?

David Schmidt: [24:39]
So this is another question that were asking. Good communication skills. Way up there positive attitude way up there team player. Those three things I don’t think anybody would argue with any of those in terms of what you want from a new employee. Um, technical knowledge is there, nearly half and job experience a little over 60% Those are obviously important. But also important is working under pressure. So, I don’t think any of those three are surprising. And the one I like which I would have put higher, and always did when I was hiring people as a smart, fast learner always liked to hire people that could, could adapt and learn quickly and move on. And that’s coming in fourth there. And then the others is, you know, task oriented and consistent. Certainly, those are important skills to have. So, just, you know, a lot of different things that you can look for in people and it’s sometimes hard to focus on all of them. But again, the top ones are the attitude and being a team player, and the good communication skills being important. That comes to the end of our survey data.

Enjoyed the Session?
Here are some other sessions you might be interested in

Making Data-Driven Credit Decisions To Succeed In The New Economy
Matthew Debbage

Matthew Debbage

Chief Operating Officer, Creditsafe
Radiance speaker's company logo
Jerry Flum

Jerry Flum

Chief Executive Officer, CreditRiskMonitor
Radiance speaker's company logo
 Greg Johnson

Greg Johnson

Sr. Director, Industry Practice Lead, Moody's
Radiance speaker's company logo
Mike Flum

Mike Flum

President & Chief Operating Officer, CreditRiskMonitor
Radiance speaker's company logo
Finance Leaders Against The Great Resignation: 5 Things You Must Do To Retain Your Winning Workforce
Carolyn Etress

Carolyn Etress

Director of Accounts Receivable, EBSCO
Radiance speaker's company logo

Experience the Power of AI-Enabled Receivables
& Treasury Applications

Schedule a free demo