A Property maintenance company outsourced their credit control to us a week ago. They were at their wits end and found us on the web. They called us in a desperate state saying they had previously outsourced their credit control to one of our competitors, but they simply did not understand their business and were as much use “a chocolate tea pot”
The Managing Director went to great pains to explain how their business worked – they do maintenance work for large property management companies. This is how it works; the property management companies collect rent and service charges from their customer’s typically residential or commercial blocks. An element of the money they collect from their tenants goes towards property maintenance. The property management company raises a works order and instructs our client to do the work.
Our client does the work and raises an invoice to the property management company, quoting the works order number, the property address etc. The property management company then fails to pay them. So much so that 80% of their aged debt was owed for longer than 90 days – a pretty poor state of affairs and no wonder that cash flow was a major problem to them.
It was only after we had imported all of their aged debt data into our own credit management software that we realised there were more problems to overcome…!
In the normal course of events when creating a sales ledger account, you would create one account per debtor, but, our customer has created one account for each property that they did work on.
E.G, let’s say that our client was appointed by Joe Bloggs Property Management to do some maintenance work on the following 4 properties:
1. Alderley Rd, Beddington
2. Chatsworth Rd, Debyshire
3. Ladywell Rd, Lewisham
4. Congruit Rd, York
Once the work had been completed, what they should do is raise 4 separate invoices on the account of Joe Bloggs Property Management. What they are actually doing is creating 4 separate sales ledger accounts in the names of the properties – Alderley Rd, Chatsworth Rd, etc and then putting the name of the actual company that instructed them to do the work (Joe Bloggs Property Management) in the contact name field within Sage
On the face of it, I can partly understand why they are doing it this way (so they can break down how much money they are owed on a “per property” basis), but it is the wrong way of doing it and is one of the major reasons for their credit control nightmare…! You could quite easily achieve the same thing in Sage by creating one debtor account in the name of Joe Blogs Property Management and then setting up separate departments for each property that you do work on. When you raise an invoice, you select the relevant department (property). This enables you to report on monies owed by debtor and by property if you choose.
In the normal course of events when telephoning a debtor and chasing for payment, you click into their account, make your call and then reel off a list of invoices that you are chasing. Due to the way in which our clients’ sales ledger is structured, it is impossible to do this. There is no way that you can see “at a glance” what is owed. We would quite literally have to click in and out of 100 individual accounts in order to reel off a list of invoices owed by the debtor. Firstly, we do not have the time to do this (and it is not a smart way of working in any event) and secondly, I doubt the debtor would be impressed with our taking up several hours of their time on the phone either..!
We have designed and tailored a report within Sage Line 50 that groups all of the individual properties by Debtor. Once the report has been run, we export it into Excel and email it to the debtor. The report contains all of the information that they require enabling them, to put their comments on the spreadsheet and email it back to us. We worked in a very similar way with a large physiotherpay practice a couple of years ago in order to manage all of their individual debtor claims with Health Insurance Companies.
We are both happy because it saves lots of time and does the job in a less intrusive way than phoning them up wasting hours of their time on the phone. Our client is happy, because there is now some structure to their credit control and they can plainly see that their cashflow nightmare will disappear very quickly.
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