Many business owners feel that they have to try and run their businesses alone. They rely on internal book-keeping and they try to keep up with any tasks that need completing by themselves. When it comes to debt collection practices, its important to understand that collection agencies are often able to recoup more of your outstanding debts quicker and more professionally than you can on your own.
1. Improve Cash Flow
If you’re trying to cut costs in your business to try and improve cash flow, then chances are you haven’t even thought about hiring collection agencies. After all, if you’re trying to cut costs do you really need another expense? The problem with many business owners is that they have their thinking turned the wrong way around.
By hiring a collection agency to recover any unpaid debts quickly and professionally, you could easily find your cash flow improves far beyond the amount of just cutting back a few expenses. The money that is left unpaid by customers or clients is cash you could be using to sustain your business further. No doubt you would already have been sending out reminder notices. When these don’t work and those bills remain unpaid its time to call in collection agencies to get your money back where it belongs.
2. Psychology Of Your Customer
As your customers have undoubtedly received several reminder letters, and possibly phone calls from you regarding their past due accounts, chances are they are realizing that you’re not very serious about recovering their delinquent debts. After all, they know they owe the money, and they expect to hear from you.
You do know that once an account goes delinquent for more than 60 days, the chances of recovering that money decreases to around 50%?
However, many customers will react very differently when contacted by a third party collection agency. They worry about affecting their credit rating and they begin thinking that collection agencies are able to take legal action to recover debts. This can often prompt customers to begin making payments quickly to avoid any further problems.
3. Debt Collection Strategies
Many business owners find it difficult to track down some customers, especially as the debt goes unpaid over time. Because people are much more mobile these days, they can change phone numbers, move, change jobs, or generally become unavailable to answer your calls. Collection agencies are equipped with tools and methods to track down your non-paying customers, reminding them of their debt obligations to you. Third party collection agencies are often able to work with debtors to understand why they’ve been delinquent in paying their bills.
As a business owner, you are less likely and less equipped to the the time to counsel and talk through your customers financial issues. Collection agencies often will try to ascertain the underlying reasons why your customers are behind. They will then tailor a workable solution. Often it can be as simple as negotiating a reasonable payment plan, such that you start receiving some of your money quickly in smaller amounts over a regular basis.
Collection agencies also offer more advanced debt recovery methods. This might include arbitration, mediation, or further legal action. By allowing third party collection agencies to professionally represent your business in recovering your past due debts can prove to be a perfect solution to get your business operating profitably again.
David P. Montana is an accepted specialist, advisor, publisher, and a seasoned veteran for 30 years regarding commercial collection agencies services. He additionally provides more useful recommendations and resources about business debt collection.