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:

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:: *
Click here to read more tips from Wilson to help yourself manage and reduce Credit Risk!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 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