Collections is about Connections

Tesorio Insights
Carlos Vega
September 17, 2020

To be clear, when I say “collections is about connections” I’m not talking about the “I know a guy” kind of connections that can get you backstage passes to a Stones concert (and I’m looking forward to those coming back soon). Instead, I’m talking about real human-to-human connections. The kind of connections we all value so much today.

I was speaking with a colleague last week who recently joined the team, explaining why B2B collections requires empathy and a personal touch to be truly effective. It’s not about making harassing calls, bombarding people with past-due emails, or breaking knees. Collecting successfully is about connecting with your customer.

This colleague doesn’t have a finance background, and collections can sometimes have a negative connotation by those outside the day-to-day. A big part of the role of accounts receivable professionals is working with customers’ payables departments to garner payment for goods and services, so their role is sometimes reduced to “those people in finance chasing down customers for payment.” I mean, just think of some of the terminologies we still use, like “dunning,” a gloomy, four-century-old term for demanding payment.

Humanize transactional processes

In reality, the most successful AR reps and finance professionals I’ve known are those who build solid bonds with accounts payable counterparts at the companies with which they do business. Personal relationships are a crucial element for success, and humanizing a process that is inherently transactional can help companies make those connections.

That simple truth has become even more important during this difficult time as businesses and consumers are challenged with economic issues such as cash flow, liquidity, and income. According to a McKinsey article on ways to demonstrate customer empathy,

"During the COVID-19 pandemic, companies that lead with empathy and genuinely address customer needs can strengthen relationships."

Right now, remote and distributed workforces are pressed to carry on amid major disruption and interconnectedness becomes a requirement for getting things done. “As companies are forced to decrease operations for an uncertain time period, individuals and millions of business owners face massive income and liquidity issues,” the McKinsey article pointed out. “Providing flexible solutions when dealing with financial challenges is now both a responsibility and a huge trust driver for companies.”

Empathy is critical to the bottom line

In fact, interconnectedness and empathy are also effective and will become best practice for businesses. As Tony Hsieh (former CEO of Zappos) often says, “Customer service shouldn’t be a department; it should be the entire company.” When collections teams take a service-oriented approach to their work they are always more successful.

Steven Odell, Credit, Collections, and AR manager at Slack, said in a recent Tesorio webinar that getting to know customers, understanding their needs, and building trust are among the skills he was able to hone during the 2008 recession, skills that continue to pay dividends.

"I think back in 2008, that’s what really drove home for me the absolute need to work with customers and understand them, instead of just pushing forward on collections. [It’s about] understanding their positions and helping them through those times."

He said Slack has always had, “very proactive outreaches to our customers” and being consistent regardless of environment is important.

Another webinar panelist, James Wallace, credit and collections manager at Snowflake, said his company, “used to rely [solely] on automated dunning.” Recently, he and his team have accelerated the collections steps, “so that it forces us to touch customers sooner.” It also may mean looping in sales counterparts.

"We’ve been doing a lot of that. I’ve had over 50 calls with customers in the last two weeks. I’m sending reports to the sales staff; they’re engaging with the customers and setting up calls with larger partners to understand what their needs are, while explaining to them what our needs are."

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Personalize collections outreach with automation

The ability for people like Odell and Wallace to make those important connections with key customers can be attributed to automating collections with tools that facilitate personalization and customization. Collections automation frees finance from handling labor-intensive tasks, enabling them to be more strategic in their work. This includes having the time to do what cannot be automated—building personal relationships with their customer peers. Automating the process of collecting cash also helps teams of all sizes scale, while giving them time to really connect.

One of the things that makes me most proud of the collections automation part of Tesorio’s platform is all the ways it helps our customers make customized and personalized connections with their customers. AR teams have a huge range of options and flexibility. For example, they can put their customers into precisely defined categories and build highly effective and tailored communication streams for each by adjusting tone, words, phrases, and much more. They can also loop in others from their organization from sales, to customer success, to the CFO to optimize customer experience and internal communication. I love seeing all the ways our customers use collections to build better relationships with their customers.

Michael Renner, senior AR manager, Veeva Systems, gave Tesorio an example of how that works at Veeva. We put in place very different messages for 30 days past due versus 60 days, 90 days, and 120 days,” he said.

"With customization, we could target bigger balances much earlier in the delinquency cycle and maintain strong customer relationships...it didn’t feel nearly as much like cookie-cutter work."

Solid relationships and humanizing processes will ultimately foster the best connections. When companies have the time to be personable, empathetic, and develop strong relationships, customers become partners, and together they thrive.

Carlos Vega
September 17, 2020
Carlos Vega is the CEO of Tesorio.
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