Tag Archives: Financial Articles

Avoiding a Million Dollar Mistake

By Matt Rocco

In 2007, a large clothing corporation made a blunder that cost them $107 million in lawsuit payouts. In August of this year, a major financial institution performed a seemingly harmless procedure that will cost them millions of dollars after the six current suits against them are cleared up. What mistake did these companies make? Their call centers – centralized offices that deal with a company’s telephone requests and campaigns for a fee – breached compliancy laws. Compliancy laws are enforced in order to protect consumers and their personal information and liberties.

Although compliancy seems as simple as using polite language and a phone script, as well as taking “no” for an answer during customer service and telemarketing calls, the laws designed by the government are lengthy and numerous. Small and large companies alike need to know and follow statutes such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Telephone Consumer Protection Act of 1991 (TCPA), the Sarbanes-Oxley Act of 2002 (SOX), the Telephone Sales Rule of 1995 (TSR), Payment Card Industry (PCI) Compliance, the District of Columbia Consumer Protection Laws, the Truth in Caller ID Act of 2010, and the National Do Not Call (DNC) list, among others.

This huge number of requirements is almost completely carried out by a portion of the Federal Trade Commission (FTC) known as the Bureau of Consumer Protection; their attorneys enforce all federal laws that pertain to American consumers. They have the authority to investigate companies, conduct lawsuits, and educate businesses on how to properly follow consumer protection laws. The FTC also created and currently implements the National DNC list. Telemarketing companies and call center campaigns must purchase a federal list of approved phone numbers after registering with a national DNC as a “seller.”

The fines imposed by the Bureau of Consumer Protection and the FTC aren’t particularly forgiving, either. In the case of the aforementioned financial institution giant, client information was electronically transmitted each time a call was transferred to their overseas calling centers. Unfortunately, these transfers weren’t protected, and the United States government gained the ability to seize this data without violating the Constitution. Though it may have been a tiny slipup, the FTC is suing the corporation for $100 per data transmission, $1,500 per phone call made, and $1,500 for each person whose information was exposed. These demands are only part of one of the lawsuits that the FTC has made against this institution. If companies of gargantuan size can make such a misstep, companies of all sizes can too.

How can a call center company protect itself from lawsuits and a giant loss of profit if the rules are so difficult to understand? Luckily, there’s an array of options. Software, seminars, and accreditation programs are all options to make sure requirements are being met within the contact centers, ultimately saving money and time that a lawsuit would otherwise waste.

One such software option is a predictive dialing solution, a program that organizes, automates, and manages outbound calls. It provides call and workflow management, an integrated database, and list control. Another similar program can be found through DNC software, which can store federal and state Do Not Call information. The software is designed to be different for every size and type of company to ensure the utility of the program. Many companies also offer training seminars so that employees can prevent compliance problems in their own company before they happen, as well as troubleshooting tips to help track down existing problems.

Probably the most comprehensive program to ensure complete contact center compliancy is the ATA-SRO. The accreditation program was designed to guarantee an excellent teleservices experience for consumers through an objective program that makes certain that government compliance is being closely followed.

Accreditation for a center will only occur after going through a three-step plan. First, self-assessment will occur through auditing software. The software will generate reports about a company’s current compliance procedures, which can be used to archive supporting documentation (all documentation is completely confidential). Next, an independent, certified ATA-SRO auditor will analyze the self-assessment data and carry out their own audit, which will include site visits to the contact center. If discrepancies are discovered during the independent audit, the auditor will return the information to the contact center for revision and correction. If the audit is successful, the report is sent on to the ATA-SRO trustees for accreditation consideration. The last step in the accreditation process is for the trustees to forward an accreditation request to the ATA board of directors so the applicant company may receive the ATA-SRO Seal of Accreditation

The call center’s identity is withheld from the board members to prevent bias, and any questions that the trustees may have go back to the independent auditor, who will coordinate with the company to reexamine pertinent information. Though the procedure may seem long and tedious, the ATA-SRO accreditation seal is a sign of integrity to all companies looking to hire a call center that will help maintain the highest levels of compliancy and provide a great customer experience.

By taking steps to make certain that call center compliancy is being followed, companies large and small can avoid the loss of millions of dollars as well as their customers’ respect.

This article was written by Matt Rocco, president and COO at Etech Global Services, a provider of intelligent sales and service solutions using inbound and outbound voice and Web chat. Etech Global Services recently gained the ATA-SRO accreditation. The process took over a year, but the results were worth the effort. Learn more about Etech Global Services, their experience with the ATA-SRO accreditation process, or their contact center solutions from info@etechgs.com.

[From Connection Magazine December 2011]

The Strategic Role of the Call Center in a Down Economy

By Peggy Carlaw

As the economy struggles to recover, many companies continue to be faced with doing more with less in all areas of the organization, including the call center. Rather than thinking of the call center as a cost center, however, smart companies are using their call centers to strategic advantage. As the first line of contact with customers – whether in a sales or service role – call center employees represent your corporate brand. They are the ones who deliver on the promises you make to your customers. During a down economy, they can improve sales and build customer loyalty – and they can do so while reducing operating costs.

Poor Customer Service Affects Your Corporate Brand: Business magazines are filled with stories of companies that are known for excellent service: Amazon, the Ritz-Carlton, Zappos, and Hewlett-Packard to name a few. Unfortunately, most of our interactions are with companies whose service is less than stellar. The extra time and energy is takes to extract service from a substandard service organization is wearing. Consequently, we search out a competitor, or we buy as little as possible from the offending company. Either way, we’re sure to tell our friends about our miserable encounters, and the company brand is maligned.

A 2010 study of 195 professionals and 165 college students by Ernest Ronan found that when customers had bad experiences with call center staff, they were less willing to buy from the company in the future. The strength of this reaction increased from 72 percent in 2005 to 86.3 percent in 2010. Similarly, customers’ negative perception of a company’s brand because of bad service increased from 83 percent in 2005 to 98.9 percent in 2010, and their unwillingness to recommend the company rose from 77 percent to 91.5 percent over the same period. These figures indicate that buyers are growing significantly less tolerant of poor service. When the economy is bad, companies struggle to compete for fewer customers. Losing customers due to poor service is just not smart business!

The Payoffs for Providing Good Customer Service: On the other hand, positive call center experiences have a positive impact on customer satisfaction and lead to a number of factors that will benefit a company vying for business in a stagnant economy.

Loyal Customers: Satisfied customers are nearly 33 percent more likely to purchase again. Moreover, since it’s less expensive to keep a customer than to acquire a new one, improving customer satisfaction reduces costs.

Improved Sales: In addition to providing repeat sales, satisfied customers are more likely to respond to an up-selling or cross-selling offer. Loyal customers also tend to be less price-sensitive, thereby increasing your opportunity for a high-value sale.

Referrals: When the economy is down, minimizing risk becomes increasingly important as customers decide where to spend limited funds. Word-of-mouth advertising is the most trusted and least expensive form of advertising. The more satisfied your customers, the more they’ll tell others.

Improved Shareholder Value: The Harvard Business Review traced a direct correlation between customer satisfaction and shareholder value. They theorized that a 1 percent improvement in customer satisfaction translates into a 3 percent market value increase for the average company. This flies in the face of the traditional view of call centers as cost centers. They may cost money to maintain, but they generate a wealth of return if managed correctly.

When customers interact with your call center, they form perceptions of your brand that are far more powerful than the messages you send through your various marketing channels. According to Beta Research Corporation, 80 percent of customers state that the quality of service they receive from a call center representative reflects the quality of the company and its products or services. This is a powerful incentive to use the call center to support your brand – one that will more than pay off when the economy rebounds.

A Strategy for Quickly and Affordably Improving Service: Rather than looking at your call center as a cost center to be cut during tough economic times, look at it strategically as a profit center, one that can improve customer loyalty and reduce operational costs. With a little attention and a small investment, your center can achieve stellar results for your company. Here are the steps to take.

Assess the Current Situation: What are your customer satisfaction scores, net promoter scores, or customer effort scores? What are your internal quality scores? How about operational metrics like average speed of answer, talk time, and call resolution rates? Do your call center employees understand the critical role they play in the success of your business? When you ask them what their job is and they say, “I’m in the claims department,” or “I’m a technical support rep,” recognize that you’ll need a cultural change to help them see themselves as serving others.

What you want to hear is: “I help our customers get a fair reimbursement on their insurance claims and help them feel secure knowing that we’ll take care of them,” or “I make sure our customers have the least downtime possible so their employees are productive and their businesses are profitable.” You’ll use this baseline assessment later as you measure your improvement.

Identify Process Snags: Do your processes and procedures make it easy for customers to do business with you, or are they designed to make it easy for you to do business with your customers? Customers want to spend the least amount of time and energy possible getting answers to their questions and solutions to their problems. Examine your internal workflows and adjust them to be more customer-friendly.

Identify Opportunities for Improving Agent Skills: Do your employees know your products and procedures? Do they know the company’s values around service? Are they able to listen to customers and clarify their needs? Do they focus on the positive: what they can do for customers rather than what they can’t? Do they set expectations for what will happen after the call? If the answer to any of these is no, an investment in training is indicated.

Engage Frontline Supervisors in Reinforcing the Initiative: Frontline supervisors are responsible for making sure that new processes are followed and that skills learned in training are employed on the job. Be sure that they understand the strategic value of the call center to the overall success of the business and the importance of their role in leading their teams in a process of continuous improvement. If possible, tie part of their pay to the performance of their team.

Measure Again: Once you’ve streamlined your processes, made sure that your call center agents have both the attitude and skills to provide outstanding service, and have frontline supervisors engaged in continuous improvement, it’s time to measure again.

Results You Can Expect: When processes are streamlined, call center employees are trained, and frontline supervisors are empowered to support continuous improvement, you can expect improved customer satisfaction scores, and reduced costs as well. For example, Jennifer Edwards, training and program manager at Motorola’s Home & Networks Mobility Division, reported a 10 percent increase in customer satisfaction and a 56 percent improvement in call resolution rates. Jean Pierre Berone, customer services director for Dell, reported that within two months after beginning the initiative in Montpelier, they achieved a 10 percent rise in customer satisfaction rates and a 10 percent reduction in the time taken to resolve technical issues.

In as little as a few months, with minimal investment in process improvement and training, you can turn your call center into a strategic tool to improve customer loyalty and reduce costs. This will improve your bottom line during the economic downturn, and you’ll be well positioned as a service leader when the economy recovers.

[From Connection Magazine November 2010]

Who Holds the Funds?

By Christine Michaels

Question: In selling part of my business, I accepted a clause that allowed the buyer to hold back $10,000 from the total purchase price with his attorney to verify my accounts. The holdback period is for sixty days after closing. It is now past the sixty-day period, and I still don’t have my money. The buyer and I are disputing how much of the $10,000 should go to me and how much to him. I also have to spend more money on using my attorney to contact the buyer’s attorney to help resolve the dispute. In the future, how do I avoid this mess?

Answer: Our experience has been that some buyers are more comfortable having a holdback period of thirty to ninety days after closing of a business purchase to address this and similar issues. This can include unexpected liens against the business or to verify the customer base. Sometimes this can become a delicate issue to resolve between both buyer and seller – especially if there is any account loss during the holdback period. At times, a holdback is confused with a retention clause, which states that accounts have to remain in service with the buyer for a certain time.

If a seller accepts a holdback clause as part of the condition of the sale, I suggest that the holdback funds should be held by a neutral third party, not the attorneys of either the seller or the buyer. A neutral third party, such as an escrow company or broker, is not influenced by either the buyer or seller and has to abide by the strict terms of the holdback agreement. (In some cases, an escrow company will charge for this service.)  I have also observed that usually both buyer and seller find that the neutral third party is more approachable, less intimidating, and more accessible to work with. I recommend this approach.

Christine Michaels is an associate with TAS Marketing (www.tasmarketing.com) and can be contacted at 800-369-6126 or tasbroker@tasmarketing.com for questions.

[From Connection Magazine Jul/Aug 2010]

Mind Your Business: Reconciling Billing Cycles

By Steve Michaels

Q: I am in the process of purchasing some teleservice accounts billed on a twenty-eight-day billing schedule. The seller wants to go back thirteen billing cycles, or one year, to average out the monthly billing, but I only want to go back four months since he has lost some accounts and the monthly average will be lower. Can you shed some light on how to resolve this?

A: This comes up frequently with more and more services going to a twenty-eight-day billing schedule. The seller is trying to get as much for his business as possible using a higher billing average, while you are trying to base the offer on what the billing is right now – not one year ago. To get the average monthly billing, consider that $10,000 billed every twenty-eight days, thirteen times a year, results in $130,000 in annual billing. Divide that by twelve months in a year, and the result is $10,833 per month.

To determine a purchase price based on the average of four billing cycles on a twenty-eight-day billing schedule, use thirteen times the average of the last four billings, which in this case would be $10,000 x 13 = $130,000. Divide that by twelve to get $10,833.

However, if the billing has gone down to an average of $9,500 for the past four months, then it would look like this: 13 x $9,500 average per billing for the past four billing cycles = $123,500 per year, divided by 12 = $10,291 billing per month.

Using this methodology, the purchase price is then determined by applying the agreed upon as the multiple. It’s simple, but it works!

Steve Michaels is a business broker with TAS Marketing; he can be contacted for questions at 800-369-6126 or tas@tasmarketing.com.

[From Connection Magazine May 2010]

Buying Habits that Work

By Allen and Pat Kalik,
with Ray Shaw, Judy Wood, and Randy Harmat

Making a big purchase for your call center is never an easy task. There’s the excitement at the prospect of major improvements for your business. There’s the fear that you might make the wrong decision. And, of course, there is the cash you have to front for the purchase. So how can you make purchasing a positive experience? We put our heads together and reflected on our experiences running an outsource call center; we also thought about all the changes in buying behavior we had to make when we changed our business model. Plus, we asked a few friends in the biz to share their thoughts. The main thing we learned is that there are some common best practices that really work. Consider this a collection of lessons learned — the trials and tribulations of purchasing in the call center world.

Plan for Your Trip: You wouldn’t leave your house on a major road trip without a map (okay, maybe you would grab the GPS unit) or an idea of where you were going. You usually have a plan, a well thought-out one at that. Making a major purchasing decision shouldn’t be any different. The first step to navigating the complexities of major purchases and vendor selection is to know where you will end up. Have a plan.

Ask yourself some serious questions. Do you intend to run the call center status quo?  Sell it in the near future, expand into new markets, or acquire other call centers? Will you be moving your location in the future, incorporating multiple locations, or networking with another call center operation? Are you looking to expand to new geographic markets via VoIP? How much do you want to spend (really, what’s your absolute threshold)? What will you gain with the purchase? Will you be able to expand market share or serve your current client base more efficiently?

Know how flexible you are willing to be with any of these important questions and how much your purchase will impact (or be impacted by) any of the answers. How important is this decision? Is it worth a lot of due diligence?

Put all your thoughts down on paper and refer back to them throughout the trip. This will help keep you focused on your objectives. Prepare a formal Request for Proposal (RFP) document that can be sent to more than one bidder. This will organize your objectives, core requirements, “nice to haves,” and options into a format that allows you to more easily compare vendor with vendor. If you don’t have an RFP document, ask your vendor to share one with you that you can tweak for your needs.

Recognize that you will go through all the buying stages, so give yourself the time to navigate effectively through them all:

  • Discovery – yeah, look at all the things this can do! This fits my needs!
  • Evaluating alternatives — oh, but this one fits the best!
  • Evaluating risk – but I don’t want to pay too much!

Talk the Talk with Those that Have Driven These Roads Before: Speak to other users about their vendors, the big, little, and medium centers.  Probe for answers about not just the good things about the product but what it may be lacking, too. Ask about the vendor’s integrity: does the vendor deliver as promised? How responsive are they? If they had to make the decision all over again, would they make the same selection?

Visit one of the vendor’s client’s sites. One of the best ways to understand how they use the product is to observe firsthand. It might take a few extra minutes for the stop, but you’ll be recharged for the rest of the trip, and you’ll have a renewed sense of direction.

Attend user groups or customer summits for any vendor on your list. This is the most honest and open environment to take the temperature of the user base. Not only will you learn about the product, but you will have numerous informal opportunities to hear what users really think. After all, they know where the traffic backups are and where the road construction is. They’ll have some great tips on how to avoid headaches along the way.

Have an alternate plan for detours along the route. Anticipate the increased cost of doing business both for the short-term during your transition period (including labor costs) and for the long-term (including any new hardware that you’ll need to support your purchase).

The More the Merrier! Get your call center supervisors and managers involved in the decision. No matter how great the product might be, it is a change, and change takes work and causes stress. If the key staff was part of the decision, they will be ready to accept these challenges. And they might just have a few thoughts about the operation that will be a contributing factor to the decision. Make sure all your key stakeholders are engaged and on board; this will make the trip much more peaceful (i.e., maybe it won’t feel so much like the kids are screaming in the back of the minivan).

Ask for Directions: Don’t be afraid to ask for directions as many times as you need to (men, are you listening?). As you progress and learn more about what options are available to you, you might have new questions from one vendor that didn’t come up with a prior one. Don’t be afraid to go back and ask more. The process should be consultative and open. If they aren’t willing to dedicate the time to you now, during the sales process, what does it say for their customer service later?

Make a list of special services and accounts that you provide outside of typical call processing. This could involve IVR, special telephony functions, connecting with databases, information exports, special dispatch instructions, and so forth. Ask your vendor if and how such requests would be handled. Ask them about alternative or creative solutions. Make sure to gain an understanding of their flexibility.

Research Doesn’t Have to Be Done in a Library: Homework stinks, but you sure do learn a lot by doing it. Use all the resources that are available to you to learn about your potential vendors. Visit the vendor’s website. Check out your sales representative on LinkedIn (or, if you want to have some fun, try to find them on Facebook or Twitter!). Check out your vendor’s longevity and financial stability. Don’t be afraid to ask for financials. New vendors come and go every few years and are risky. Make sure your vendor will be there for the long haul – and that they’ll still be around to help you get to your final destination.

There Should Be a Cost Benefit: If it was cheaper and easier to fly instead of drive, would you? Consider all your options. Is there true value in the solution? Don’t forget both the tangible and intangible benefits. Throw a dollar amount at it and weigh that against the cost. Find out what features and capabilities you will have that you don’t have today. Evaluate these from a labor savings point of view, as well as for business growth opportunity. Projecting your growth and expenses might not be an exact science, but it’s certainly worth your educated guess.

Trust Your Gut: If you think the minivan is going to be more comfortable, take the minivan and not the MINI Cooper. Your feeling about the vendor, his or her integrity, and his or her willingness to listen, to be helpful, and to care beyond the business relationship is important — don’t discredit it.  You’re not making a one-time purchase; you’re entering into a long-term relationship, and you want it to be a happy one.

[From Connection Magazine December 2009]

Mind Your Business: Buying Past Due Accounts

By Steve Michaels

Question: I am in the process of purchasing an answering service that has some ninety-day past-due accounts. The seller feels that these accounts have the same value as the current accounts. What is your feeling about purchasing past-due accounts?

Answer: The value of an account decreases the longer it is past due. The main reason is that the seller fails to address the risk that a buyer assumes in acquiring past-due accounts. Any buyer should be concerned about the longevity of past-due accounts. Not only are such clients more likely to terminate service (either voluntarily or involuntarily), but the buyer’s collection efforts could increase this likelihood. Normally the buyer wants to be in a position to start building goodwill with the new clients to offset any apprehension they may have about being “bought” by a new owner. Building goodwill is expensive and time-consuming. To have to do this on top of trying to collect balances that are severely past due would be counterproductive to the buyer’s efforts and could lead to more service terminations.

In general business practices, clients that are more than ninety days past due are not considered real accounts and are given a zero value for accounting purposes. Based on industry standards, I would say that any answering service customer that is past due by more than ninety days has a very low value, perhaps a fraction of the value of a current account. While it may still have some value, the only fair way to purchase an account this stale is on retention. The more stale the account, the longer the retention period should be for that account. Remember, any account that is over ninety days past due or does not pay at all is a waste of time and money for both buyer and seller.

[Portions of this article are from Doug Parent from Echo Communications in Santa Barbara, California.]

Steve Michaels is a business broker with TAS Marketing; he can be contacted at 800-369-6126 or tas@tasmarketing.com.

[From Connection Magazine November 2009]

The Recession’s Impact on Contact Center Technology Investments

By Donna Fluss

Three years ago, DMG Consulting predicted that the U.S. economy would enter a recession in 2009. While we did not anticipate the massive failure of financial institutions, we were expecting a significant economic correction. The current situation is expected to drive many economies around the world into a serious recession. Recessions generally have a dramatic impact on the level of technology spending. DMG Consulting expects the next eighteen months to be very challenging for many technology companies, including contact center vendors.

During recessionary or challenging economic times, most enterprises freeze all but essential technology investments; any investment that can be postponed generally is. Depending upon the severity of the economic crisis, even investments that have been approved but dollars not yet spent may be postponed. While the full effect of this economic downturn is not yet known, given its worldwide scope, it is expected to likely last well into 2010.

Here is how a recession is going to impact sales of the three top contact center applications: contact center infrastructure (automatic call distributor, or ACD), interactive voice response (IVR), and workforce optimization suites and modules.

Hosted Contact Center Infrastructure: If economic patterns from the prior two recessions hold, investments in premise-based contact center infrastructure (automatic call distributor, or ACD), which require a large up-front capital investment, will slow significantly. However, sales of hosted contact center infrastructure seats for routing and queuing are expected to grow at a compounded annual growth rate of 28 percent over the three-year period from 2009 to 2011 (see Figure 1). We believe that the recession is going to be very kind to the hosted contact center infrastructure market. It will drive enterprises large and small to consider hosting as a viable alternative in order to conserve cash and avoid making long-term commitments.

Figure 1: Hosted Contact Center Infrastructure Market Projections, 2009 to 2011, by Seats

CM Mar 2009 #7-1

Source: DMG Consulting LLC, January 2009

 Interactive Voice Response: DMG expects the current economic conditions to temporarily slow IVR growth, as companies of all sizes delay all but critical expenditures. However, once companies lift their investment freezes, there will be an increased emphasis on self-service applications as a means of reducing operating expenses. The IVR market will benefit from the need to replace outdated and expensive-to-maintain systems with newer technology. There will also be a positive impact from the need to standardize technology in newly merged companies, particularly in the IVR-intensive financial services industry. Figure 2 reflects the IVR market growth projections for 2009 – 2011 by segment.

Figure 2: IVR Revenue Market Growth Projections 2009 – 2011
2009 2010 2011
Premise-based IVR – Inbound 4% 4% 3%
Hosted IVR – Inbound 15% 15% 12%
Hosted IVR – Outbound 18% 15% 15%

Source: DMG Consulting LLC, January 2009

Workforce Optimization Solutions: While the next couple of years are not expected to be particularly strong for workforce optimization solutions, this technology segment is likely to perform better than many other contact center and IT sectors. This is because most QM/Recording solutions are considered productivity tools. Just as importantly, some of the individual modules that are part of the WFO suites are in a high-growth phase and may continue to perform better than most other technology sectors. Speech analytics, which is just gaining mainstream acceptance, can enhance productivity, improve customer retention, and increase revenue generation. Workforce management solutions have recently been enhanced and are considered leading productivity tools in contact centers. In addition, surveying/enterprise feedback management products are being used to give companies insights into the customer experience.

QM/Recording solutions and all of the individual modules found within the suites are now being offered on a hosted or Software-as-a-Service (SaaS) basis. This is a departure from the traditional, premise-based licensed product delivery model. A hosted/SaaS arrangement allows companies to implement new solutions without large up-front investments in license fees and installation. This gives cash-strapped contact center managers acquisition alternatives that they did not have during other recent recessions. Many of the WFO vendors outperformed the market during the last recession because their solutions helped companies achieve goals that were essential during tough times. Now, with an alternative method for enterprises to acquire these products, they are again expected to outperform the IT sector and to continue to grow, albeit at a slower pace. Figure 3 shows projections for the various WFO segments. These projections take the recession into account.

Figure 3: Workforce Optimization Projections, 2009 – 2011

CM Mar 2009 #7-3

Final Thoughts: Projects that contribute directly to an enterprise’s bottom line have a good chance of being approved if they exceed investment approval thresholds for payback, internal rate of return, and net present value. Chief financial officers are looking for quantifiable benefits that fall into one of the following categories: cost savings from reductions in operating and staff expenses, reduced network charges and maintenance from displaced systems, incremental revenue, or reduction in customer churn. Contact centers should continue to make strategic investments in projects and tools that give them a differentiator, particularly in challenging times.

Donna Fluss is the founder and president of DMG Consulting LLC, a provider of contact center and analytics research, market analysis, and consulting. She is the author of The Real-Time Contact Center, the 2008 Contact Center Executive,Management Briefing, and many other leading industry reports on contact center hosting, IVR, speech analytics, performance management, workforce management, surveying and analytics, and quality management/liability recording. Contact Donna at donna.fluss@dmgconsult.com.

[From Connection Magazine March 2009]

Mind Your Business: Selling Your Receivables

By Steve Michaels

Q. I am in the process of selling my call center. The buyer would like my receivables. What are they, and why should I give him something that I have worked for?

A. This is a good question. First, receivable are the monies owed by the clients of a call center to the owner – that is, the monthly invoices that require payment. Hopefully, within thirty days of the last invoices being sent, the balance of your receivables will have been paid.  Well-run companies make an effort to have all receivables collected within thirty days for a healthy cash flow. Receivables that lag into sixty or even ninety days become incrementally more difficult to collect with each day that passes, so it behooves companies to collect their receivables in a timely basis.

There are a few reasons why a buyer would like receivables. The first is cash flow. The buyer would like a continuation of cash flow without interruption to pay the monthly bills of the acquired company. Second, acquiring all the receivables eliminates the confusion of which party is due the receivables after the business is sold.

There is no hard-and-fast rule regarding receivables; it is negotiable. The seller may state that he or she is owed that money and wants it. In this case, the buyer collects those receivable funds and then distributes them to the seller. Other times, the buyer may charge a percentage for collecting the money for the seller.

Another option is for the buyer to buy the current outstanding receivables. An example would be to perhaps pay 100 percent of the current billing cycle, 80 percent of those over thirty days, 70 percent of those over sixty days, and 65 percent of those over ninety days. The actual rates vary with each situation; they are listed in the “Asset Purchase Agreement” and paid at closing.

Sometimes the receivables are part of the purchase price. If so, sellers should collect as much of their receivables as possible prior to the closing date, because those funds will go to the buyer after closing. Also, plan to close on or before a billing date so that you have the opportunity to collect as much of the outstanding receivables as possible.

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com for questions.

[From Connection Magazine January 2009]

Mind Your Business: Charging a Holiday Fee

By Steve Michaels, with Paula Ford

This month’s question was taken from the ATSI listserv. The answer was written by Paula Ford from Answer Center, Virginia Beach, Virginia.  I often receive the same question but have not found a better response than Paula’s.

Q. For those who charge a “holiday fee” to their clients, what feedback do you have?

A. Profit is not a four-letter word. It is the only real reason you started your own business anyway. Do you need the money to hire, train, compensate, and reward great employees?  Are you going to need to upgrade your phone equipment, buy new chairs and headsets, give cost of living raises, and pay increased rents and taxes? Do you need the money to offset overtime and bonus pay you must offer to get your staff to work holidays?

Business people look at the cost of their services and do everything they can to deliver them as efficiently and cost-effectively as possible.  Next, they look at their total costs, including taxes, marketing, sales, depreciation, staff benefits, and so forth. Then they do their pricing. They do not price their services to “get by” or “keep afloat.” They price their services to make enough profit so that they can grow and prosper.

Yes, we all love our customers.  Yes, we like to help them grow their businesses. It’s great to know that most days we save at least one life.  But if we want to continue doing those great things, then we have to make money to stay in business.

If 5 percent of your clients throw a fit and cancel their service, let them; stop waste time trying to please them. That will leave more time to lavish on the highly profitable clients.

Implement the holiday charge – or just raise your regular monthly rate by $15 and advertise, “includes holiday coverage,” but one way or another, get the money you need to grow your business.

Couldn’t have said it better myself – Steve

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com.

[From Connection Magazine May 2008]

Learn to Earn: 10 Tips for Financial Success

By Steve Michaels

I received a call from a call center owner who had hit rock bottom. Essentially, her business was destroyed when its sale to an unscrupulous buyer went bad. When I asked her what I could do, she broke down and cried. This scenario is played out all too often; she had been working in the business for twenty years, but just because she knew how to answer a phone did not qualify her to know how to run her own business.

One of the first things I suggested was that she read the book, Rich Dad Poor Dad by Robert Kiyosaki. This number one New York Times best seller would help her learn more about the business world. Although the author does not agree with the strict accounting rules advocated by CPAs, his methodology of making money is proven and can help anyone who owns their own business. Here are some of his more thought-provoking tips (with my thoughts interspersed):

Tip 1: Choose your thoughts rather than reacting to emotions. Ask yourself, “Is working harder the best solution to this problem?” Most people are so terrified at the truth that fear is in control. By not thinking, they continue to work themselves to death. “We will always have emotions of fear.” By not giving into your emotions, you are able to delay your reactions and think. Learn to use your emotions to think instead of thinking with your emotions. Higher emotions tend to lower financial intelligence.

Tip 2: Know the difference between liabilities and assets; then buy assets. If you want to be rich, this is all you need to know. As Kiyosaki says, “Rich people acquire assets. The poor and middle class acquire liabilities, which they think are assets.” An asset is something that puts money in your pocket; a liability is something that takes money out of your pocket.” The road to wealth is through increasing your monthly cash flow from the asset column to the point where it exceeds your monthly liabilities (expenses).

Tip 3: Being financially “illiterate” leads to financial struggle. Most financial difficulties are caused by a lack of education. Too many call centers charge an arbitrary rate that is not supported by the financial facts. Financial reports tell a story – the numbers reveal the plot; they tell you where your cash is going. In poorly run businesses, the financial story is working hard in an effort to get ahead.

Tip 4: Be realistic about how long you could survive without working.  Do you have assets that create wealth in addition to your paycheck, or is your paycheck your primary source of income? Wealth is the measure of cash flow from the asset column compared with the expense column. If you have to increase your expenses, first you must increase your cash flow from your assets to maintain your level of wealth. Your next goal would be to reinvest the excess cash flow back into your asset column.

Tip 5: Take advantage of being a business owner. Your financial security should revolve around your asset column versus your income column, which can be aided by owning your own business or developing your assets. Being an owner of, or a partner or investor in a business can enrich your asset column. Other income generating assets include stocks, bonds, mutual funds, income generating real estate, and notes.

Tip 6: Put your money to work for you. The following advice from Rich Dad Poor Dad applies to you whether you are an owner or an employee: “Once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works twenty-four hours a day and can work for generations. As your cash flow grows, you can buy some luxury items. Rich people buy luxuries last, while others tend to “buy luxuries first.” Remember, investing in your assets and developing them is the real luxury!

Tip 7: Maximize your tax advantages. Utilizing a corporation or another legal entity wrapped around the technical skills of accounting, investing, and markets can aid growth. An individual with the knowledge of the tax advantages and protection provided by entities such as corporations can get rich faster than someone who is an employee or a small business sole proprietor.

Tip 8: Don’t be afraid to take some risks. Quoting Kiyosaki again, “It’s not the smart that get ahead but also the bold.” Called guts, chutzpah, audacity, bravado, cunning, daring, tenacity, or brilliance, financial genius requires both knowledge and courage. “If fear is too strong, the genius is suppressed.” You need to take risks, be bold, and tap into your inner genius, allowing it to overcome your fears and self-doubt, turning them into power and confidence.

Tip 9: Decide to “pay yourself first.” This is probably the most difficult to master if it’s not part of your makeup. When you collect your monthly receivables, Kiyosaki’s advice is to “allocate money to your asset column before you pay your monthly expenses. Use this pressure to inspire your financial genius to come up with new ways of making more money, and then pay your bills.” Remember, “Poor people have poor habits.” One such habit is depleting your savings. The rich know that savings are only used to create money, not to pay bills.

Tip 10: Your two most important assets are education and time. The single most powerful tool you have is your mind. Conversely, Kiyosaki warns that “an untrained mind can create extreme poverty that lasts a lifetime.” Most people simply buy investments rather than first learning about investing. Having no money to invest is not an excuse not to learn. Each of us knows people who are highly educated, but their balance sheet paints a different picture.

Here are twelve more poignant quotes to keep in mind:

  • “A truly intelligent person welcomes new ideas.”
  • “People who hurry and catch a wave late usually are the ones who wipe out.”
  • “Don’t listen to poor or frightened people.”
  • “You become what you study.”
  • “It’s not how much information you know but how fast you learn.”
  • “Keep your expenses low. Build up assets first.”
  • “Use [your valuable] time to make more money.”
  • “Save money instead of borrow money.”
  • “Don’t be too focused on money”
  • “Financial intelligence solves problems and produces money.”
  • “Money without financial intelligence is money soon gone.”
  • “Sometimes you win, and sometimes you learn.”

In the process of writing this article, I have learned a lot. I discovered that if you want to learn about making money, teach it to someone else. This is also true for a smile, love, and friendship. I trust that the law of reciprocity works; what I give out, I will receive. Simply put, “what goes around comes around.”

I give Rich Dad Poor Dad a five-star rating; it is ideal for anyone interested in growing his or her business and creating financial wealth.

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com.

[From Connection Magazine April 2008]