Recovering debts is one of the most important facets of any business, but it’s also the most overlooked. When you’re starting out, you don’t spend time thinking your clients might not pay. You’re more focused on building awareness and convincing them to buy your products or services. However, as part of business, you may need to let your clients pay later.
Sometimes, the debt is a straightforward loan in the form of a bank transaction, credit card agreement, or a capital injection. Other times, it may be a hire purchase deal, an instalment plan, a monthly billing arrangement, or goods extended on credit. Whichever form of debt your business covers, you need a professional debt collection agency as a partner.
It improves your business cash flow
Accountants are good with numbers, but even if they explained them to you, you may not get a clear grasp. As a business, you think things are fine as long as goods are flying off the shelves, your shop is full of customers, and your social media is buzzing. You might even be soothed by the thousands of dollars in your bank account.
However, all that money and traffic is only part of the story. A large proportion of that generated cash goes towards bills. You have to pay rent, salaries, overheads, and taxes. You have to buy raw materials, and maintain your production equipment. These expenses have to balance against sales in order for your business to be profitable.
For example, your rent or salaries may be due but your customers haven’t paid yet. And when they do pay, your finance team has to decide which bills to pay immediately and which ones can be stalled or negotiated. In an ideal world, all customers would pay on time, ensuring you always have enough money for business expenses plus a little extra.
Unfortunately, this is rarely true, so even when your business appears to be ‘doing well’ you still find yourself paying salaries and utilities late. To minimise this type of cash flow problem, you need a debt recovery service. It ensures that debts are followed up and repaid in a timely manner so that your business finances run smoothly.
It increases your profit margins
Receiving due payments on time is a cost-saving measure. If the business has scheduled payments like bank loans or payroll, getting them paid on time avoids late fees and penalties, as well as the turnover cost of disgruntled employees. Of course this needs the cash to be available in the first place, so while hiring a debt collector costs money, it saves more.
If your debts are so late that they require legal proceedings, you’ll have to pay lawyers, and they cost a lot more than debt collectors. Collecting dues in-house also takes time away from other office tasks, since no business has someone dedicated to debt collection. It’s not a practical job description, especially when it’s so much more efficient to outsource.
Debt collection reduces business expenses and increases employees’ productivity, and these combine to boost your profit margins. When money comes on time, you have the resources to expand and branch out in different directions. Investing in a debt recovery service can help with all that, so it’s worth the cost.
It keeps your employees happy
If anyone has ever owed you money, you know how uncomfortable that can be. Debts can break intimate relationships. You might become angry, hostile, aggressive, and resentful towards the person that owes you. On a personal level, every time you see them make a purchase, you want to punch them, especially in this social media age where’s it’s so easy to see them spending ‘your money’ on holidays, gadgets, and fancy meals.
All this stress and anxiety could be driven by a personal debtor, so imagine how much more stressful commercial debts are to the creditor. Your employees feel all the negative emotions associated with debt, but it’s compounded. They know that if they don’t collect the debt, it affects cash flow, which could affect their salary.
Plus, failing to get the money back could be viewed as non-performance and affect their reviews. All that extra pressure is bad for your employees’ health. Make their work easier by hiring an external debt collector. It frees your team for more productive, less frustrating tasks, improving their productivity and job satisfaction levels.
Clyde is a highly creative and dedicated person with an entrepreneurial spirit. He is always looking for ways to help people, whether it be contributing to their success or just making them laugh. His commitment is demonstrated through the dedication he has put into all of his work so far, which includes writing business blogs for various companies as well as running his own blog on Medium. He loves reading books about how other people became successful entrepreneurs like himself; he finds inspiration from these stories and hopes to make a positive impact on others’ lives too!