1. IMPROVING YOUR COMPANY’S CASH FLOW

2. Billing & Collections Best Practices by Gene Rodriguez Transworld Systems, Inc.

3. Gene Rodriguez Senior Account Executive 5 Years with Transworld Systems,Inc. Phone: 727-432-5690 Fax: 813-286-2587 Email: gene.rodriguez@transworldsystems.comgene.rodriguez@transworldsystems.com Website: www.web.transworldsystems.com/Tampa/www.web.transworldsystems.com/Tampa/ Address: Transworld Systems,Inc. 5601 Mariner St., Ste. 475 Tampa, FL 33609

4. Best Practices Start at the Sale Written Agreements Payment Terms Possible Penalties for Violations Proof of Commitment

5. What to include on an invoice? A clear invoice # and request it on check A specific due date Details including the date of service, the case, time spent, copies provided along with corresponding rates Acceptable forms of payment Your phone # No 30, 60, 90 boxes

6. Start Early – Recover More W e all know that the older an account gets, the harder it becomes to collect. But did you know that at 60–90 days past due accounts begin to depreciate at the accelerated rate of 1/2% per day? At 180 days past due funds have depreciated to the point where only 30% on average will ever be recovered. 0 30 60 90 120 150 180 210 240 270 300 330 365 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10% 30% 74% 95% A G E O F A C C O U N T S IN DAYS Source: U.S. Department of Commerce study on depreciation of accounts held in-house Critical Depreciation Period 1/2% per day

7. Follow Up Early Be the “Squeaky Wheel” Written request for payment including due date and acceptable payment types Remind and thank them for earlier commitment Attach copy of previous commitment

8. Top 10 Ways to Improve Collections Businesses do not always get paid for the service or product they provide. The following steps are critical to reduce this cash flow killing problem.

9. Rule 1 Have a Defined Credit Collection Policy Clearly state your terms of payment in writing for every customer. Top 10 Ways to Improve Collections

10. Establish Written Internal Collection Procedures Easier when training new employees Demonstrates importance placed on collections Establishes performance benchmarks Review and update as needed Keep it clear and simple

11. Defining a Collection Policy Define “past-due” Define acceptable payment arrangements How many written notices? How many phone calls? How is returned mail handled? Do you make personal visits?

12. Rule 2 Invoice Promptly and Send Statements Regularly If you don’t have a systematic billing system, get one. Top 10 Ways to Improve Collections

13. Rule 3 Use “Address Service Requested” Post Office will research addresses of “mail skips” and for a small cost of seventy cents they will forward the mail and in return send you a post card with the most current address on file. Top 10 Ways to Improve Collections

14. Rule 4 Use Your Aging Report, Not Your Feelings Be diplomatic, but be persistent. Tip: Use colored paper for past-due notices Top 10 Ways to Improve Collections

15. Rule 5 Contact Overdue Accounts More Frequently Contact late accounts every 10-15 days. Top 10 Ways to Improve Collections

16. Cash Flow Improvement “Come on, I know you’re in there, I can see your eye through the peep- hole!

17. Rule 6 Make Sure Your Staff Is Trained Even experienced staff can become jaded Firm but courteous is the key Staff must “sell” concept to clients that they should pay what is owed Top 10 Ways to Improve Collections

18. Collecting by Phone When to start calling Goal: Payment in full with 1 call Track days/times of calls Getting past the gatekeeper Set goals of # of calls Mental Attitude – expect success Ask for payment TODAY (credit cards)

19. Communicating by Phone Make a connection with Debtor Actively listen for clues for motivation Speak clearly and energetically Have objective in mind Know the next step – be prepared “It’s my policy that… Take good notes (just in case)

20. Positive vs. Negative Communications I know you expected quality work delivered on time… I know you have responsibilities as we all do… This will cost you more if I have to take further action… I don’t care about your problems…

21. How to Ask For Money Asking For Money is A 3-Step Process Step One – Sympathize Show compassion, “I know how that happens sometimes” This diffuses any possible anger and catches them off guard.

22. How to Ask For Money Asking For Money is A 3-Step Process Step Two – Restate the Obligation “Mr. Smith, your account was due on m/d/y.” This should cause some guilt on their behalf as well as have them realize you are “right” in asking to be paid.

23. How to Ask For Money Do Not Ask How much can you pay? When can you pay? Can you pay something? Note: This gives control of the conversation to the debtor, enabling them to give unreasonable answers

24. How to Ask For Money Asking For Money is A 3-Step Process Step Three – “How Much Are You Short?” “Mr. Smith, of the $200 that is due, how much are you short?” 1.If can pay some now, then give finite time to pay balance. 2.If short whole amount, you are still in control of payment terms.

25. Rule 7 Admit and Correct Any Mistakes On Your Part Customers realize that “to err is human” They will appreciate prompt and courteous action when an oversight is caught Beware: Do not try and cover up mistakes! Top 10 Ways to Improve Collections

26. Rule 8 Follow the Collection Laws in Your State No public advertising of the debt No calling at odd hours, threats, etc Top 10 Ways to Improve Collections

27. Cash Flow Improvement “DON’T TELL ME YOU FORGOT TO PAY THE MARRIAGE BUREAU TOO!!

28. Rule 9 Use a third party sooner After 90 days, in-house efforts are more expensive and less effective Third party demands motivate customers Top 10 Ways to Improve Collections

29. Remember this slide? 0 30 60 90 120 150 180 210 240 270 300 330 365 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10% 30% 74% 95% A G E O F A C C O U N T S IN DAYS Source: U.S. Department of Commerce study on depreciation of accounts held in-house Critical Depreciation Period 1/2% per day

30. When to Seek a 3 rd Party According to written policies/procedures Broken promises – “check is in the mail” Unable to reach by phone (voicemail, in a meeting, answering service, etc.) Disconnected Phone or Number changed to unlisted Missed Payments, Payments getting smaller

31. When to Seek a 3 rd Party – cont’d Certified mail returned “Unclaimed” Admission of inability to pay Debtor says “You’ll get paid when I get paid” Bounced Check and no response Disputed Balance, disputed quality of service or product

32. What to look for in a collection agency Licensed, bonded insured All terms in writing References available Reputable Experienced in your industry Hold Harmless Agreement Performance Guarantee Nationwide coverage Pricing (flat fee vs. percentage) Status Reports Personal account representative Soft or hard collections at your direction Electronic account submission and updates

33. Rule 10 Nobody Collects Every Account Even with a good billing and collection policy, a few accounts will never be collected A consistent collection process will diminish the number of slow and non pay accounts, and that’s a victory in itself! Top 10 Ways to Improve Collections

34. Cash Flow Improvement “It may seem we’re sinking deeper into debt, but really we’re just experiencing a quarter of negative growth.”

35. Collections: What’s Your Legal IQ? True or False # 1 An account must be at least 90 days past due before sending to collections. FALSE

36. Collections: What’s Your Legal IQ? True or False # 2 You must inform debtors before turning their account over to a collection agency. FALSE

37. Collections: What’s Your Legal IQ? True or False # 3 You cannot speak to a debtor’s spouse regarding the debt. FALSE

38. Collections: What’s Your Legal IQ? True or False # 4 As long as a debtor pays $1 per month, you cannot turn their account over to collections. FALSE

39. Collections: What’s Your Legal IQ? True or False # 5 If a check is marked “Payment In Full” you can simply scratch it out. FALSE

40. Collections: What’s Your Legal IQ? True or False # 6 Even if you never use a collection agency, you can threaten turning the debtor over anyway. FALSE

41. Cash Flow Improvement

43. Loan Manager