Hi, my name is Adam Stewart, Debt Collection Expert and owner of ADC Legal Litigation Lawyers.
Keeping on top of your delinquent accounts is tough and demanding. In operating and building a company, you will create a number of assets that are a measure of your success. One of those assets often viewed with less a priority than others is the company’s accounts receivable. Because of lack of management attention or concern, this important area of your company’s financial strength is often allowed to deteriorate.
In my experience in consulting with SME’s over the past 15 years, I can tell you that, on average, an invoice that is 90 days overdue only has about a 50% chance of being collected in full. Wait a year and the recovery rate further drops to about 15%.
Therefore, you can see the importance of acting quickly. This means having a good, quick, internal procedures and processes in place and then outsourcing to a reputable collections agency sooner, rather than later.
When receivables age without a consistent and disciplined approach to collection, they begin to lose value. The longer a debt is uncollected, the more unlikely it is you will receive full value from it.
This is why it is important to outsource to a collector as soon as you can. We are the experts in this field. You can concentrate on what you do best. If you are a credit manager, this will free your time to put systems in place and work on some risk management strategies to reduce future accounts receivables. You are qualified in your area of expertise, so when you have outstanding debts, it is best to assign that task to a debt collection expert.
Some things you can do before you outsource to a debt collection agency are:
• Have consistent processes for invoicing customers
• Sending a simple notice after an invoice is late
• Establish clear terms and conditions, so that your customer is aware of any penalties or charges, when the matter is outsourced to a debt collection expert
If you have all these processes in place and still end up with outstanding invoices, then this is where a debt collection agency comes in handy. We have tools, skills and training to accomplish the time consuming tasks, such as skip-tracing or negotiating payments or instalment arrangements.
The most important thing is the need to be proactive and fast when outsourcing to the debt collector.
The second consideration lies in understanding that outsourcing a delinquent account or bad debt to a third-party debt collector changes the dynamics of the process. We have a number of resources that we employ to increase the effectiveness of the debt collection process. Additionally, your company is freed from the concern, enabling you to focus on what you do best and accepting that a professional is now seeking to protect and recover your assets.
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