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Further Gamifying Accounts Receivable

0 Comments | This entry was posted on Sep 13 2011

In the not too distant past, I talked about how to use game mechanics in accounts receivable so as to help ensured that a business gets paid, but what about the people who are doing the collections?

Accounts receivable is tedious and draining work that involves a lot of repetition, so why not use game mechanics so that it is more engaging, rewarding and yields better performance out of the employee?

Applying game mechanics to business processes is tricky, because the last thing you want to is trivialize the work or condescend to the employee. For me, coming into a job and hearing someone say, in all seriousness, “Let’s go play the Accounting Game!” is the stuff of nightmares, and I love accounting.

So, how to use game mechanics in collections? Thankfully, this is relatively easy to do, since collections enjoys a clear goal, the collection of money from accounts.

To do this, the best approach is not to create a game and insert it into the collections process, but rather, take what tasks employees already perform and make them into a game.

To start, assign a point value to every percentage of the total accounts receivable ledger that a particular employee is responsible for. Doing it as a percentage is important, since different employees are responsible for different accounts and will have different amounts that they need to collect.

Secondly, depending on whatever criteria is used at your company, assign each invoice a rating category from new, to concern, to critical, or whatever ever gradients work for your company, and with each gradient being worth different point values. Also, add a point bonus for every time an employee clears all of the invoices marked for a rating category, except for new. For critical invoices, for every critical invoice not collected, subtract points from an employee.

This begs the question of what to do with invoices or amounts that have to be written off. I believe the best solution is to remove points from employees for invoices, accounts and amounts that are written off that they are in charge of. This disincentivizes write offs and will encourage employees to be more aggressive with troublesome accounts. Mind you, the point deduction for a write off should not be as severe as the one for not collecting from a rated critical invoice or account, since the decision to write off an amount should be agreed upon by management.

But we are not done, when an employee collects from an invoice and the payment is posted, your accounting system needs to post, immediately, the gain in points for the employee in a place where the employee can see it easily. This can be just about anywhere, from an intranet site to a scoreboard in the office.

It is important to have these scores publicly available to other employees in the company, for this increases not only the social pressure to perform, but also it increases the participating employee’s perception of the status they gain by performing well.

I would not stop at points, however. Instead, incorporating achievements into the workplace can also have great affect. These achievements can be based upon any number of things, be it being the first to clear a rating category within a month, to collecting a certain amount over the lifetime of a person’s employment in the collections department.

What is great about achievements, especially ongoing, public achievements, is that they provide an emotional reward for a job well-done without costing the company extra (though do not be surprised if they are used as an argument for a raise during the annual performance review).

By doing these things, not only does a company increase engagement, but they also create greater job satisfaction and make better use of the competitive instinct. Another advantage is that it enables companies to identify those players that consistently bring good value to the company. Yes, coming in first within a period is a good thing and should be celebrated, but it is more likely that the top performer will constantly change hands. It is that person who continually comes in the upper-tiers, even if they never place in the ranking, that are the backbone for any company, and these are often the people who are overlooked in favor of rewarding the occasional big winners and punishing the low performers.

In short, by using game mechanics in collections, companies can ensure their continued productivity and cash flows, and be less reliant on debt-financing.

Gamifying Accounts Receivable

2 Comments | This entry was posted on Jul 24 2011

Unbeknownst to many people, many successful businesses die due to a lack of cash.

Sounds weird, doesn’t it?

It is because most businesses sell on credit to other businesses. On paper, the company is profitable, but at the same time the company’s cash reserves, which they use to operate the business, dwindle to nothingness.

To combat this usually offer incentives for paying quickly, such as a 2% discount if the receivable is paid within 10 days. This is a good thing, as it can build up to significant savings for the paying company.

This idea of added incentives is well developed in sales, with higher discounts given to larger orders. This allows companies to show a larger paper profit, if a smaller margin, and attract investors. However, it does not keep the company afloat.

What I think a better solution would be, and is applicable outside of providing physical products, is better developing the payment portion of the business cycle.

Imagine this: A company gets .5% off their bill for paying within 10 days. They do this 3 times in a row, they get 1% off. 7 times in a row, they get 1.5% off. And so on and so on until a maximum discount is reached.

Outside of discounts, a company could offer other incentives to paying early by partnering with other business, like offering frequent flyer miles with a partner airline. Or perhaps hotel discounts. Or sales discounts with an electronics company.

If a company wanted, they could further increase the incentive for paying early by issuing a press release of top ten customers, not based on orders, but on payments. This would give the paying companies greater status and reputation, thereby increasing the incentive to pay.

So, by using game mechanics in one’s account receivable policy, a company can increase their chances of survivability, and not just post potential paper profits.

The Man Who Sold the World

5 Comments | This entry was posted on Jan 16 2011

Not too long ago, I read an article about the development of economics in games:
Everybody Wants to Own the World

Mostly, the article discussed about how a world’s economics are becoming more a part of games, but also how developing cash sources are becoming more important than other aspects of character building.

One snippet caught my attention, though, “Eventually, I am overflowing with cash, which now allows me to get into all of that expensive equipment relatively easily since I now have the cash to be the hero that I need to be.”

You see this a lot in games, so much so that in every game I can think of where you have to buy goods, eventually you can become so flush with cash that nothing is beyond your reach, and this bugs me. True, a person can do this in the real world, but it is a lot harder (trust me).

One of the reasons why it is so easy in games is that money only has value for one person in the game-world, the player. No one else needs money. Sure, shops ask you for it, but nothing is done with it. It just disappears. Since there is no need for money outside of the player, prices never change, allowing the player to amass vast fortunes that do nothing for the player after they get whatever the most kick-ass equipment exists in the game.

Such is true even in games like Fable III. (Spoilers) After you take over, the world needs cash, so you have to raise it either one way or another. This may sound like this would be pretty cool, except that it is easily done. Just buy up the world and wait. Since the game doesn’t advance until you advance it, but your money accumulates based upon how long you play, you can just sit and wait and you will eventually have all the money you need and them some. And after you get enough money to put into the treasury, what do you do with the money you continue to accumulate? Nothing. Nothing at all. Sure, you can buy all of the equipment in the world, but that won’t even put a dent into your vast fortune. Plus, as an added bonus, the kingdom never needs money again.

Though that may appeal to some people, I see it as a problem. As such, I have a few ideas as to make this a non-issue:

1. Make the player character need more things than equipment. Make it so that they need to eat regularly. This will make it so that the player has to spend money regularly.

2. Necessitate upkeep and maintenance of properties. Fable III did this, though it was too cheap. I would also include the development of properties.

3. Have prices change based on supply and demand. Now, this is a bit more difficult, as you have to have a system in place to determine supply, a system in place to determine demand, and a system in place to determine how much money is currently in circulation. This will make it so that players will have to manage their money much more closely.

4. If you run a country or town or whatever, a system for tax rates, as well as upkeep and development costs. This is something I would have very much liked to have seen in Fable III. I mean, why can’t I keep the orphanage and turn one of the money properties I own into a brothel? Why not better develop Mourning Wood? How about restoring the fort to keep the Hollowmen at bay?

5. Speaking of property develop, military development as well. Even though I never control the army in Fable III, since I have insane amounts of cash, I would have gladly spent it all just to give them the nicest uniforms and equipment, even if it didn’t affect the game. Why? Just because I could.

6. If you own a ton of properties and shops, or have a staff, or an army, their salaries should be an ongoing cost.

These are only a few of the ideas that come to mind. Are they easy? Not really. Are they worth it? Absolutely, they will keep me playing, and the more I play, the more likely I will buy DLC.

Still, though I applaud the inclusion of economics in games, I believe that it should be as richly developed as all other aspects. Otherwise, at some point it becomes forgettable or useless.

-James-