The Round Trips That Slow Commercial Collections

A company can hand us a debtor's name, a balance, and a phone number, and we will work the account. Adapting to whatever a client already has is our job, and no placement gets turned away for arriving thin. Most of the accounts JSD handles resolve with nothing further required from the client after the day they send the file.

One of our longest-standing clients sends very little with each placement. We receive an invoice, a balance, and a name to contact. Yet recovery on invoices placed more than 90 days past due has averaged approximately 76%. Attributing that to any single factor would be guessing, since debtor solvency and the age of the balance at placement move recovery as much as anything a client sends us. Over time, it taught us not to treat limited documentation as a reliable signal of how a portfolio will perform.

What changes from one client to the next is how often we have to go back to them while the work is underway. We need to ask them to send us a copy of the invoice, and confirm whether a check from March was applied. Pull the purchase order along with the signed proof of delivery. The debtor short paid, so we need to know whether the deduction was authorized. One check covered eleven invoices, so we need the remittance detail to see which ones it closed.

Each of those is a round trip. A question we cannot answer from where we sit goes to someone who can, and the account waits where it is until the answer comes back. Every one of them lands on the desk of the person who placed the account in the first place to relieve themselves of small tasks.

In these scenarios we are the ones generating the traffic. Most of what we know about how our clients organize their own information, we learned by having to ask them for things. What that taught us is where the round trips come from and how many different ways a client can close them off.

Where the round trips come from

Plenty of accounts go smoothly. The invoice comes over with the placement, the debtor raises nothing worth arguing about, they pay us directly, and the client receives a check from us when the money clears. The administrative work concentrates in a smaller group of accounts that turn on missing documentation, unconfirmed payments, unapplied credits, or an internal approval nobody has chased. So the question was never whether a client should open their systems to us. It was how many accounts in a given portfolio were the second kind, and what those ones were costing everybody.

Volume had little to do with how well any of these companies ran their operation. It tracked how their information was arranged. On a large account the invoice might sit in one system and the payment history in another, with the purchase order held by a buyer who had since changed roles and the signed delivery receipt inside an email thread nobody had a reason to search. No single screen showed all four. Someone inside the company who had been working in the system for months could assemble it in a few minutes because they knew where to look. The same task took us an email and three days of waiting.

What the waiting costs

Three days sounds like a rounding error on a balance that is already ninety days late. On plenty of accounts it is. On the ones where the timing lands wrong, three days could cost a month.

A debtor's accounts payable department runs on a cycle. Invoices approved before a cutoff go into the next check run and the rest wait for the one after. An account held up for backup from the client is an account sitting through that cutoff, and by the time the documentation arrives the balance has aged into a bucket where the debtor's internal approvals are stricter and the file is harder than it was.

A client places accounts to stop spending time on them. So when a request from us sits for three days, it is usually because the person who can answer it has moved on to the work that placing the account freed up. From their side, an email from a vendor asking for a copy of a purchase order is routine administration, and routine administration waits its turn. Every part of that is reasonable, which is what makes it worth naming. The delay is outsourcing working as intended, and on the accounts where it lands in front of a check run it costs the client the recovery they hired us to get.

Neither side can flag the requests that matter, because from the outside there is no telling which ones are sitting in front of a cutoff and which have three weeks of room. They all look the same going out. A delay that costs nothing on nine accounts and a month on the tenth has to be treated as though it costs a month, because the tenth account is indistinguishable from the other nine until the check run comes and goes. That rules out the obvious fix. Asking a client to treat our requests as urgent means asking them to put the account back on their desk, which is the thing they paid to have taken off it.

When a debtor's AP clerk raises a question about a specific line and the collector has to say they will find out and call back, the conversation halts. What a collector can answer on the spot shapes how the call ends, and we usually try to arm them as best as we can. A collector who can pull up the invoice, the purchase order, and the payment history while the clerk is still on the phone settles a disputed line in one conversation. A collector who has to go ask someone has told the debtor that the file is incomplete. We have watched debtors get noticeably firmer right after that admission, and it is hard to blame them.

What changed when one client opened their system

On one large engagement, the client gave our team direct access to portions of their system. We could pull invoices and backup documentation ourselves, and we could check whether a payment had already been applied before raising a balance with the debtor.

We expected it to save time, but it did a lot more than that. Routine requests to the client essentially stopped, and by the client's own accounting the access removed close to 90% of the collections workload the portfolio had been putting on their internal team.

A dispute where the debtor claimed the delivered quantity was short still needed someone on their side to weigh in on the delivery record. A discrepancy where their record and the debtor's disagreed and we could not tell from the outside which one was right. Occasionally a settlement offer that needed sign off, or a question about how hard to press a customer they intended to keep selling to. Everything left on the list needed a person at the client to exercise judgment. Nothing left on it was a check number.

Most companies are unable to open a system that also holds unrelated financial data to an outside firm, and plenty of others could but would need an approval out of proportion to the size of the placement. So the clearest version of the effect is also the least available one, and reading it as an argument for system access would be the wrong lesson to draw.

The same result through a different door

A file that arrives with invoice copies, purchase orders, and payment history attached removes weeks of correspondence that would otherwise happen one account at a time, and it costs the client nothing after the day they send it. We start working the account instead of building it. How we take those files in, including high-volume batches in whatever format a client's system already produces, is covered in our note on placement intake, and the placement form asks for the same things in the same order.

Requests that sit in a general inbox for three days get answered in an hour once they reach somebody whose job includes answering them. Nothing about the client's systems has to change for that, only where our questions land.

A debtor who pays us closes the file on the spot. A debtor who pays the client directly has resolved the balance just as completely, and until somebody tells us, we are still calling. We have made that call. Calling a customer about an invoice they already paid costs the client something that has nothing to do with the receivable, and a weekly payment report from our client is the difference between a courteous close and a call that could strain a relationship they wanted to keep.

Credentials for one named user, or a view of the payment ledger showing what posted and when with no ability to change a record, gets us most of the way without handing over control of anything. On a couple of engagements we have worked from a customer portal the client already maintained, on a login they issue and can revoke in a minute.

Approval turnaround looks like an administrative detail and behaves like a negotiating variable. A controller who offers 85% and waits two days for an answer has time to talk to someone above them and decide they were more generous than they needed to be. We have lost numbers that way. Where a client sets settlement authority in advance, at 80% for instance, a collector who reaches 80 cents or better closes the file in the same conversation it came up in. Authority is a decision rather than a system change, which puts it within reach of companies that will never open anything. Settlement stays the exception on most portfolios, so it matters for the minority of accounts where it arises, and it matters most on the day it arises.

A client rarely needs more than one of these open. A company that will never grant access to a system can still send a file that arrives complete. A company whose records sit across four systems can still name one person who answers the same day.

What stays with the client no matter what

Two things stay with the client permanently, and no arrangement changes either. A settlement writes down the client's money, so a settlement takes the client's approval. When a debtor pays the client directly rather than paying us, the client is the only party who can confirm the money arrived.

Every large engagement now opens by asking how invoices, payments, documentation, and approvals actually move through the client's organization, and then building the collection process around what they are able to provide securely. The answer is different every time, and the question that gets us somewhere is a narrow one. Which round trip is costing this company the most, and which door do they already have open.

We will work a file that arrives with nothing but an invoice and a phone number. What we cannot do from the outside is shorten the wait for an answer only the client can give. On the accounts where timing decides the outcome, that wait is where the return goes.