As every company is set up for profit, one of the bad things that can happen is when customers don’t pay on time or even worse, not at all. Poor cash flow can eventually break down a prosperous business and in order to remain successful, you will possibly find yourself in a situation where you have to collect a debt from a client.
Making the claim yourself can turn out to be pretty time consuming and will also put a strain on your finance department that should focus on other tasks than retrieving the money. But after early invoices and polite reminders did not help, taking more serious action might be the way to go. After all, the companies cash flow is at stake and receivables not be left to chance as they can have a serious effect upon other areas and capital vital for the well being of your business. In some cases, more pressure needs to be put on the customer after first phone calls and deadlines were ignored since these debtors are likely to continue not to show any reaction unless a third party gets involved.
An expensive mistake a lot of Australian business owners make, is to hesitate to involve a debt collection agency as experience shows, the longer people wait to retrieve outstanding debt, the less likely it is that they get paid – especially after 90 days of the past due date.
Considering time is one of the key factors of running a successful business, the use of a debt collector will save time, and speed is an important requirement for effective debt collection. For a straightforward process of debt collection, a collection agency will be happy to go through all terms and conditions agreed upon by the client and handle all the correspondence on the company’s behalf, as well as looking through all the invoices and deliveries made to build a case. Without wasting time and money on internal resources, an agency will be more stubborn to retrieve the debt owed and committed to offer a fast and beneficial service.
Collection agencies have spent many years honing their skills and with their proactive and professional approach will be most likely to recover receivables that are still high and secure payment quickly. A debt collection agency is in the know of all legal avenues and in many cases, a single letter from such an agent will put enough pressure on the debtor to pay up within seven days as the letterhead of a debt collection agency may have an impact on the debtor.
A lot of businesses shy away from hiring a collection agency because they are afraid of losing their good relationship with the customer, as well as their reputation. But involving an agency is not an aggressive way to collect a debt, more so it’s the way to go after other efforts have failed and with his communication skills, a debt collector will always make sure that the work relationship with the client does not have to suffer under the strain of debt. Given the fact that the business will have to get its own financial department to try and retrieve the collectables, maybe even have to train staff to perform such activities or hire a person who has experience in doing so and pay an extra salary, the costs may be much higher in the long run. If a business is not hiring a debt recovery service when a client is past due date, this could lead to losing more money than the outstanding debt as internal resources are wasted and the business is not able to focus on customers and improve sales to withstand the market.