Effect of credit and bad debt management on organizational productivity, growth and profitability
Participating in a debt management plan could make it difficult for you to qualify for additional credit, and some debt-management plans prohibit consumers from applying for new credit anyway. Debt-counseling agencies get their operating money by receiving a percentage of each client’s payments back from creditors. If you’re current on your bills, you may want to try negotiating new payment amounts and lower interest rates with creditors on your own. You never know what kind of deal you may land. And you may be able to make real headway on your debt by simply tightening your belt for a few months and freeing up more cash for debt payments. Changing one part of the organization may inadvertently manifest changes in others, so in order to make positive and appropriate change, companies have to look across the organization to see how proposed change will affect other functions and departments. Credit and collection departments must, today, measure the full customer-to-cash process, from establishing the customer relationship all the way to cash in the bank. After all, to improve any department, initiative or organization, the right elements must be measured and tracked across the entire organization in order to take corrective actions resulting in better cash flow and increased profitability.
Developing proper metrics for any organization is one of the toughest challenge company can undertake. It can be extremely complex because it involves identifying the right measures taking into account the myriad objectives of each part of the business understanding how those measures affect the overall organization and its individual parts, and, finally, actual implementation. It is task rife with pitfalls that should not be taken lightly. Following is detailed description on how to implement proper metric systems in credit and collections departments, including aligning business objectives, avoiding common pitfalls, and learning what to measure and how to measure them and to improve the bottom line. Metrics are standard measures used to assess performance. Unfortunately banks play a large role in the high credit card debt that many consumers are carrying. With lucrative offers of low interest rates that expire after year with no annual fees to rewards card that have everything from free flyer miles to cash bonuses, cardholders snap these cards up in a hurry in order to be able to take advantage of the many bonus offers.
Unfortunately, many of these offers are targeted at young peoplenew high school graduates, college students, and recent college graduateswho are not yet emotionally mature enough to understand the importance of having good credit or even how to handle credit card. With this early lack of knowledge about credit cards comes a future of financial chaos. Sometimes those in serious credit card debt will apply for another credit with higher limit and lower interest rate with the original intention to get rid of the other cards and use the new card. Some may even take out a consolidation loan, and after the balances are paid on their credit cards, they start using them again instead of getting rid of them. For some the reality does not hit home until the bill collectors are knocking on the door, the judgments are issued, and they attempt to apply for loan only to find that their credit is so severely damaged that they can’t even borrow a few hundred dollars to buy some furniture.
Credit Counseling
If you’re not disciplined enough to create a workable budget and stick to it, can’t work out repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting credit counseling organization. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems.
Debt Management Plan
If your financial problems stem from too much debt or your inability to repay your debts, credit counseling agency may recommend that you enroll in debt management plan. A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if DMP is appropriate for you, reputable credit counseling organization still can help you create budget and teach you money management skills.
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