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Nov 01 2018
The Importance of Policies
Sandi Smith, Chris & Dick's Cabinets & Countertops

When I was hired to my current position over 13 years ago, I was told there was over $120k in uncollected COD payments. You can imagine what my first thought was, but my second thought was, "is there a policy in place that would have prevented this situation?"

At the time we used a 50/40/10 contract. Most of the outstanding balances fell under the 10% upon completion and there obviously wasn't anything set in stone on who would or should collect the balances. The issues regarding final payment were not being addressed internally. There were no policies to hold any person or department accountable.

With approval of management, the first policy put in place for existing orders was to have the installers carry COD paperwork with them so at the end of the install they could request the final balance due. Then I changed the contacts for retail to be 50/50 contracts. Since most of the cost involved is material, we found we could collect the balance due on the job when material was delivered, thus taking collection of any final balances out of the hands of the installers.

We trained the sales staff on how to explain the new 50/50 policy and put me in their back pocket for customers who were concerned about paying in full before install. I personally take responsibility for the company when I state that we're not going anywhere as a company and will be here to complete the job in full, including services, etc. To make sure everyone is following procedure, I now review all retail COD jobs weekly and confirm the 50/50 deposits.

Next, we needed to train our drivers on the new policies. It was important to us as a company that the approach to collecting the balance upon delivery went smoothly. There is always concern with the fact that my drivers are not collectors, but they are tasked with making sure the job is paid before unloading. If a driver doesn't pick up final payment when delivering he is instructed to go back to the job site to do so, and then written up internally. They all know that three strikes and they are no longer employed.

Every customer is called a day prior to delivery and the scheduling department is responsible for notifying customers if there is a balance due. By doing this we can tackle any miscommunication about the final balance. Also, we find that most customers are willing to pay by credit card thus also alleviating driver's involvement.

Policies are very important part of every company. They are created for specific reasons and should always be followed, whether it be the collection of COD's when delivered, all the way down to anyone operating a fork lift should be wearing a seat belt. Policies are only good as long as people are following them and upper management is needed to make sure they are being followed and have consequences when they are not.

Like a credit application, policies should also be reviewed regularly because your company is always changing, and issues will always arise that constitute change. We've changed our procedures on retail contracts multiple times throughout the years and its been beneficial to include employees in changes that make sense to everyone but still keep exposure at a minimum.

So, all these years later, I have on average, one or two COD jobs a month that require my involvement, either to explain our policies or give refresher courses to those who don't follow procedure. It's made my job that much easier and frees up my time for other important collects, like real open accounts with terms.