Why do policies work? Contrary to popular belief, most people thrive under rules and function at optimum when they have clearly defined duties and know the company policies.

As the CEO or MD of a company you are the rule maker. You are the person responsible for telling everyone in your enterprise how you want it to function and what the parameters are to achieve the goal. Once you’ve written a set of rules by which the enterprise will operate, the everyday operation should run far smoother than without, just because your employees will know exactly what they can and should not do. The expectations of their output is clearly defined and the rolling out of these rules is done so in fair and consistent manner.

In summary, if the necessary time and effort is put into establishing policies, the outcome of everyday tasks become more predictable and stable.

So why do policies work?  It would be best to explain using an example:

What is a sample extract of a debt prevention policy?

“Once an account has reached 30 days overdue, a letter of which the form is provided – is sent to the client requesting payment”.

Why would such a policy be effective?

  1. You give your employee a clearly defined rule and structure to follow as well as giving him or her the typecast of the letter that should be sent. Once this has been done a couple of times, it becomes routine and no real additional effort for the employee.
  2. If the employee fails to comply with the policy, it gives the employer recourse to discipline if needs be. This will enforce your policy and ensure the consistent application thereof.
  3. Consistency is key. Your clients will see that, if they do not pay in time, they get a letter reminding them of payment. This letter will be slightly embarrassing to your client and they will make a mental note to not let the payment wait again. Consistently enforcing your policy will also ensure that clients do not take the letter personally but will recognise it for what it is.
  4. Incorporating policies gives employees clarity on the method you wish for them to employ when performing certain duties. Having this clarity reduces training time of new staff and more sustainable outcome at every occurence.
  5. Following rules will also give employees peace of mind that they are doing their job correctly if they just act according to the policy.
  6. Policies reduce instruction and lessen uncertainty or questions, which saves time for all involved. If the policy is comprehensive and clear, employees should know exactly how to react in certain circumstances.
  7. As the rule maker, you get to decide what is important and what is not, and you get to write that policy accordingly. You’ll also have the benefit of a holistic view of the enterprise and can prioritise all tasks accordingly to ensure that the operations run optimally.

The above scenario is an example of one rule out of one policy, which clearly indicates the need for policies to be adopted. If you wish to gain more insight into what policies would assist your company in preventing bad debt, please feel free to set up a consultation with our offices in which we may help you explore the best possible solutions. Let us help you avoid the bad debt , guide your employees on best practises and set the framework for a successful collection process.


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