The Financial Managers Perspective: In an article entitled “Soaring Above the Oblivion” appearing in the current issue of MFM’s The Financial Manager magazine, Abe WalkingBear Sanchez, principal of A/R Management Group, Inc., describes the role that a company’s C-level managers play as mentors and storytellers who are “the keepers of its core values.”
This reminded me of the storytelling that took place during a credit and collections session at Media Finance Focus 2010, the annual conference for MFM and BCCA. Moderated by MFM Board member Debbie Barrera, Business Manager for Post Newsweek’s KSAT TV, session attendees shared stories about their toughest collections challenges and how they overcame them. After reading WalkingBear’s article, I can see how these stories serve as opportunities for reinforcing some of the core values that corporate level credit and collections managers need to instill within their organizations. Here are a few examples:
Walk the talk with delinquent accounts
Most credit managers agree that one area where the station needs to be very consistent is with respect to not running ads for its past due accounts. Otherwise, non-paying advertisers can see the warnings as idle threats.
In one case, a customer who sponsored a particular program segment believed there was no way his ads would be pulled for non-payment. That changed the morning when the program host’s message, “We’ll be back after this word from our sponsor,” was followed by a bit of dead air. The client paid that day and has been on auto-payments via credit card ever since.
Don’t mistake a flash in the pan with a good credit risk
A customer who was expanding his highly successful home renovation enterprise into the U.S. wanted to purchase local air time during the Super Bowl as part of a major ad buy. With the promise of so much revenue, the station treated the client with a trip to the Super Bowl and ran the ads without receiving all of the info typically required for approving a credit application. By the time the account became past due, the client had fled the country, owing the station several hundred-thousand dollars as part of a $15 million tab he had run up with local businesses.
Being the boss’s friend is no excuse
A high-profile restaurateur and “pillar in the community” had become a 120-day deadbeat, mostly due to the boss’s insistence that it would be too embarrassing to pull his ads. Meanwhile, the advertiser redecorated his home with the finest European furnishings, hosted an extravagant wedding for his daughter on the estate, and he purchased a six-figure sports car. With her boss’s reluctant approval, the collections manager went to the client’s home one morning accompanied by the local sheriff and a towing company. The client, who protested having his car impounded to no avail, showed up at the office that same day with payment in full, including the impound fees.
Being a friend of a friend is no excuse
In another example of allowing personal relationships to over-ride policy, an appliance store owner persuaded a close friend of a credit manager who was new to the job to lobby on his behalf. Relying upon the friend’s recommendation that “he’s good for it,” the station agreed to air the ads without meeting the company’s standards for creditworthiness or requiring the client to pay in advance. When the account became past due, the client finally wrote a check for the full amount; which bounced. Having learned his lesson, the credit manager brought the check to the sheriff’s office and the advertiser’s enterprise was padlocked. The store owner proceeded to write a check to the sheriff that also bounced, landing him in the local lockup. “I’m no longer friends with either of those gentlemen” the now-seasoned collections manager offered.
Personal relationships are important
While these previous examples suggest caution in allowing the trust for others to replace company policy, another story illustrates the importance of maintaining a direct relationship with clients. This story was told by a credit manager who left his local market as part of consolidating credit and collections within the station group. In reviewing the list of past-due advertisers, the now corporate credit manager spotted a furniture store from his old market. Over the next month or so, the client engaged in a series of activities to stall making a payment, never making a connection between the name of the person contacting him from the corporate office and the credit manager who used to be responsible for his account. That changed when our storyteller had an occasion to be back in the market and made a personal visit to the store. When the client matched the name he’d been seeing on collections correspondence to the person standing in front of him, his face flushed with embarrassment and he couldn’t write a check fast enough.
Sharing Values and Responsibilities
This last example really brings home why it is so important for our C-level managers to recognize and exercise their role in instilling the company’s values, whether it’s through informal storytelling or as part of formal training activities. Abe WalkingBear Sanchez, who has worked with a number of media companies on improving their accounts receivable operations, suggests having key people participate in a weekly, ongoing improvement meeting, which may need to be held after normal business hours. “Constantly remind everyone, yourself included, that any little improvement has a real and significant effect on reducing the cost of doing business for your company,” WalkingBear recommends.
With many organizations centralizing their credit and collections functions, local account execs are now more responsible for ensuring the company’s credit policies are followed and for extending their personal relationships into a broader client services role that encompasses assisting with collections, when necessary.
With this in mind, WalkingBear encourages cross-training sales, credit, operations, customer service and marketing managers so they’re familiar with each others’ jobs. This approach will uncover and reduce the inefficiencies created by old departmental thinking and behavior. In addition, work groups that cut across old department lines are better able to get the work done in a more efficient manner, he has found.
WalkingBear says it is also important to establish and document the goals for each function and the methodology for achieving each of those goals. “Remember that the people carrying out the processes are the people best suited to tell you how the goals are to be achieved; they’re the experts.” This knowledge will enable us to put the right people in the right job. It’s not enough just to have the right people in the job, WalkingBear notes that it is also our job to make sure that employees have what they need in order to carry out the processes involved.
Effectively communicating desired behaviors starts at the top. WalkingBear’s advice is, “If you are the owner or CEO, or desire to be, get to the office early, and, if there’s if there’s snow, shovel the walk. If there’s trash, pick it up. And whether you feel like it or not, greet everyone you meet with a big smile and walk like you have places to go and things to do.”
While the lessons from Media Finance Focus 2010 are still clearly visible from our rear view mirror, plans for 2011 are already underway. Themed “Empowering Progress, Inspiring Growth,” the Association’s 51st annual conference will be held from May 15-17 at The Westin Peachtree Plaza in Atlanta, GA. MFM Board Vice Chair Richard Taub, Senior Vice President, Finance and Business Development for Vme/Grupo PRISA, is serving as Chair for Media Finance Focus 2011. Joining Taub as Conference Co-Chairs are MFM Board member Dawn M. Sciarrino, Partner at Sciarrino & Shubert PLLC, a law firm specializing in media industry issues, and Dalton Lee, Vice President, Finance of Meredith Corporation’s Local Media Group, and a former MFM Board member who’s currently serving on the Association’s Advisory and Strategic Planning committees.
Thanks to their leadership, the event will feature more than 100 presenters and provide the latest information on accounting, taxes, human resources, technology and credit & collection issues tailored to the media industry. And, as the credit and collections session I described earlier illustrates, the conference serves as a forum for industry professionals to meet and discuss solutions to the challenges posed by this rapidly changing business climate.
Stay tuned for more conference news in the coming months. It’s just one of the ways that MFM and our BCCA subsidiary support the industry by sharing information and best practices.
–Mary M. Collins is President & CEO of Media Financial Management Association and its BCCA subsidiary.
