A Recipe For Disaster – Michael Dennis, CBF

I recently had lunch with a friend of mine.  As we talked, he shared his concern that the deduction specialist he had hired about a year ago was not working out.  He dreaded the idea of firing her because he did not want to take the time necessary to train someone to replace her.  Based on the details he provided, I guessed that he was using the deduction specialist position as the entry level position in credit and collections.  He confirmed this was true.  When asked, he told me that the deduction specialist was trained by one of the collectors, and agreed that her training was focused more on collection practices than on dispute resolution.  I asked if there was any formal training program for the deduction specialist position.  The answer was no.  I asked if he had created operating procedures and working instructions.  Again the answer was no.

Since he asked for my comments, I told him that I thought hiring an entry level person to handle deductions for his department was a recipe for disaster.  I added that reconciling customer deductions and resolving them through customer payment, credit or write off is far more complicated that collecting undisputed past due invoices – which while more complicated than simply dialing for dollars does not reach the same level of complexity as researching and resolving deductions.

Michael Dennis, MBA, CBF, LCM

I suggest that the person selected as the deduction specialist should be promoted from among the collectors meaning this should never be an entry level position.  Given how complicated the deduction resolution process can be, I think that processes, policies and procedures along with work instructions must be developed for and provided to the deduction specialist.  Anything less will result in less than optimal results.  Anyway, that’s my opinion.  What’s yours?

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

5 Replies to “A Recipe For Disaster – Michael Dennis, CBF”

  1. I absolutely agree that promoting from collection staff to handle deduction resolution would be more effective. Presumably, the collector be familiar with their company’s procedures and where in the sales, purchasing or shipping areas mistakes are more likely to occur that result in short pays. In addition, the collector will have relationships with the customers that would make resolving issues easier.

  2. You’ve got that right, don’t blame the employee for your failure to train them in the way they need to learn and provide resources (documented processes). I find it’s best to have someone who has posted cash AND done collections both, before attempting to research and resolve deductions.
    I had a collector who didn’t understand how short pays/deductions originated, so they would just “guess” and make up answers as they blamed the cash application person. I fixed that by teaching the collector cash application, figuring out what happened 1st, then what happened etc…until it ended up short paid/deducted from a check and how that looked. We reviewed the mostly likely scenarios and the necessity to understand from start to finish before trying to explain it to a customer. With the new responsibility and understanding how it happens, the finger pointing stoppped and deductions started getting resolved.

  3. He hired an inexperienced busboy, and expected the work of a sous chef? What part of “specialist” did he not understand? I’m glad you set him straight! I hope he retained her and moved her to a more suitable position, then followed your suggestion of promoting from within the collection group to fulfill the deduction specialist position. It’s sad to think that she may have lost her job due to his inability to understand the duties of those under him and do his job effectively.

  4. Well, let’s at least give the guy credit for reaching out for advice! There have been MANY times that Michael has given me an insight to a situation that proved again, I am a work in progress and don’t have all the answers. We recently rolled out our Dispute Management Team for our expanding credit department. This was a process that took over 6 months to achieve, due to the exact details laid out by Michael. We were able to acquire seasoned credit professionals – from our industry, and external hires – for what I think is a great team. I have echoed Michael’s comment that there are three ways to reduce the AR: Payment, Credit or Write Off. The disputed invoices are often more difficult and time consuming to resolve that a standard payment. Thank you for this article, as I will share these comments with our team. I think they will appreciate the acknowledgement of what a “special” job they have and how important they are to the Credit and Collections Department.

  5. I think you would have made a terrible deduction specialist. It requires incredible attention to detail and fantastic skills in time management and organization to excel in this role.

    I am not saying you could not do the job Michael. But after working with you for almost a decade, we know your strength is not the detailed research, analysis and documentation gathering necessary to be effective in the deduction management role.

    This is another way of saying or reminding others that selecting the right person for this position involves looking for a unique combination of skills and personal attributes. For this reason, promoting from within is a good solution since you already know the strengths and weaknesses of internal candidates.

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