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Collections Best Practices
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should consider using as the foundation of a comprehensive order exception
tracking system:
• Customer orders with nonstandard prices
• Customer orders for which the delivery date has exceeded the requested date
• Customer orders for which the quantity on hand is less than the amount
ordered
• Customer orders for which the scheduled production is later than the
requested delivery date
• Customer orders for which partial deliveries have been sent
• Customer orders requiring special-order parts
• Customer orders requiring a special form of transportation
• Customer orders requiring a special form of packaging

All of these exception reports focus on nonstandard customer orders, or orders
for which there is some kind of shortfall. They are a very effective tool for honing
in on those orders for which there will probably be customer complaints, which
may result in collection problems.
The ability of a collections manager to create all these reports will depend on
the type of computer database used to collect data about customer orders. If the
database does not cover all of the items noted in the previous list of reports, it will
be very difficult to create the reports, unless it is cost-effective to do so manually.
Also, there should be a good report-writing tool or a willing programming staff to
assist in the creation of these reports. If these factors are in place, a collections
department can benefit greatly from an advance knowledge of which customer
orders are likely to result in collection problems.

Cost: Installation time:

7–15 INSTALL PAYMENT DEDUCTION INVESTIGATION SYSTEM

Customers usually deduct payment amounts from invoices they owe because of
problems caused by the originating company. Examples of these problems are
product returns caused by faulty products or incorrect order processing, product
damage due to incorrect shipment packaging, incorrect sales deals issued by sales
personnel, and promotional or advertising deductions for deals that were not
clearly specified by the marketing staff. Unfortunately, none of the staff in these
areas in which the problems originated are likely to hear about the resulting col-
lection problems, because the collection task is placed in the hands of a clerk, in
either the accounting or treasury departments, who is thoroughly overworked,
and who certainly has neither the tools nor the authority to drive corrective
changes back through the organization.