Two years ago Shurman Fine Papers was going through a computer conversion. At that time Charlene McDonald, the Fairfield, California company’s director of credit, realized some accounts had become billing problems and had not been contacted for two years.
Suddenly, she had a large volume of calls she needed to make fast. Shurman, which has been in business since 1949, had been outsourcing the legal aspects of its collections to ABC Company of Buffalo, New York, for years. “We send them the tough stuff, like the people in bankruptcy or those who have gone out of business,” she explains. However, the vendor had never made any “soft” collection calls to Shurman’s customers.
McDonald wanted these soft calls to be very customer friendly. Instead of the typical collection call, she wanted the callers to say, “This is your balance. Could you pay us?” Her goal was “to flush out the easy money” from these “past dues.”
The calls had to appear that they were coming from Shurman, not a collection agency. “I wanted them to treat my customers the way I would treat them,” she says. At all costs, she did not want this group to sever their relationship with Shurman, which sells greeting cards, gift wrap, stationery sets and other gift items made of paper through its Papyrus retail stores.
She decided to let ABC handle these soft calls. ABC was successful in this campaign. Now the vendor handles Shurman’s soft calls, too. “They got us through the hard times. Now they are part of our every day business,” the credit manager notes.
Staffing a Key Reason to Outsource
Staffing is a key reason why Shurman has chosen to outsource its collection activities. An outsourcing provider can handle bursts of activity like these forgotten past dues. In addition, the company’s core business is seasonal. McDonald says the manufacturer is papered over with thousands of invoices due at one time. Then, the business dries up until the next holiday surge.
McDonald is adamant about having knowledgeable people handling her accounts regardless of the volume. “I don’t want to bring a bunch of temps who are in the door one day and out the next,” she says. Now her accounts are familiar with ABC. “They know their New York phone number,” she adds.
Outsourcing the collections process shifts the staffing problem to the vendor. McDonald knows ABC always has the professional staff to handle her unique needs. Staffing these kind of positions can become difficult in a tight market. ABC can attract the best help available.
Shurman first selected ABC because it was a full service collections supplier. Looking into the future, the manufacturer wanted to work with a firm that was an expert in the industry who knew every aspect of the business. Then, when Shurman had an additional need, McDonald knew she could add that to the supplier’s job list without too much worry. Her advice to new outsourcing buyers, “Find a company’s that A to Z. Don’t just get what you need today,” she says.
Taking stock, McDonald says her relationship with her supplier started the right way. ABC flew management level leaders to work with her. “They felt they needed to see how I wanted things,” she says.
Bonding on Both Sides
The credit manager says she went out of her way to bond with her outsourcing partner. They reciprocated. She says “you have to put in the time up front” to build a successful outsourcing relationship. Even today, McDonald receives phone calls from everyone from the chief executive officer to a member of the collections staff who ask her, “What can we do for you today?”
The buyer must also know exactly what it expects of its vendor. Shurman wrote a very clear scope of work. That made it easier for ABC to produce superior results. “They knew our expectations and worked hard to meet them,” she reports.
The ABC managers learned the intricacies of Shurman’s computer system. They are live on the system from New York. “It is as if they were sitting in my office,” reports McDonald. This is important because the vendor needs up-to-the-minute information about the company’s accounts receivable. “This keeps them from calling accounts who paid us this morning,” explains McDonald.
Another plus is both companies have the same corporate values. This carries weight because the supplier can easily drive away Shurman customers. McDonald considers ABC “my business partner.” That speaks reams about the relationship.
If there are questions, the credit manager emails New York. More often than not, the telephone is ringing five minutes later with an account manager ready to work things out. The ABC sales manager visits Shurman monthly. The two managers, who spoke on the phone daily at the outset, now touch base once a week.
The service level agreements (SLA) are straightforward. They detail how often Shurman wants ABC to call its accounts. And there are specific directives about how customers are to be handled.
To date, this outsourcing relationship is on a roll.
Lessons From the Outsourcing Primer:
- Outsourcing works well for companies with seasonal needs because the supplier provides the extra staff needed during peak times.
- Relationships work well if both buyer and supplier share the same corporate values.
- Select a supplier that has a full compliment of skills. That enables buyers to turn to them when new situations arise.