Due diligence, organization, persistence, common sense, and a reasonable attitude will take you a long way towards avoiding your accounts receivable becoming bad debt. Those qualities aren’t always easy to get in an employee. Here are 10 reasons why you may want to hire a professional debt collector instead.
Reason # 1 – Time
You can’t do everything. Regardless of the time-management technique you adhere to; you must know your time is better spent on activities that produce an exponential payoff – like strategic planning or sales. Someone has to collect late invoices, but it doesn’t have to be, in fact, it shouldn’t be you.
Reason # 2 – Prevention
If you’ve been reading this blog or my stuff for a while, you know we’re all about preventing bad debt collection issues before they begin. An accounts receivable or bad debt collection agency (like ours) can analyze potential customers’ credit history to spot slow payers before you extend too much credit. Prevention is better than collection.
Reason # 3 – Productivity
Whether for accounts receivable or bad-debt, collection professionals spend their days and their professional development on collecting money quickly and efficiently. We organize around the process of collections, and we purchase resources to collect more money faster. It’s what we do well. Free yourself to spend your time doing what you do well, building and running your business.
Reason # 4 – Cash Flow
Professional debt collectors recover billions of dollars annually for small businesses. Not millions, billions! When you allow a debt collection agency to utilize its resources (rather than yours) to collect your delinquent accounts receivable and your bad debt, you increase cash flow while saving time, energy, and money.
Reason # 5 – Speed
Both business debtors and consumers pay faster and more often when contacted by a collection agency. Professional debt collectors have more time to follow up with debtors and resources not available to most small business owners and landlords, such as consumer credit reporting and skip tracing.
Reason # 6 – Credit Reporting
A debt collection agency can report your debtor’s poor payment history to the national credit bureaus. Consumer credit reporting protects other businesses and sellers and negatively impacts your customer’s credit score. Avoiding that negative consequence speeds up payments.
Reason # 7 – Skip Tracing
Skip tracing means finding new contact information for customers who haven’t paid and have moved without providing you with their new address and phone number. Professional debt collectors have access to resources for finding debtors not generally available to small businesses.
Reason # 8 – Documentation
Professional debt collectors document everything. Thorough documentation is important to you for several reasons.
- Good documentation improves collection results –
- If you decide to sue, complete documentation will support your case in court – judges don’t like cases without documentation.
- If you decide to write off the debt, the IRS requires proof that you’ve done everything you can to collect.
Reason #9 – Expert Insights
It’s not always clear if a late invoice is ready for a collection agency. Most professional debt collectors will discuss your particular debt with you to help you decide the best way to go. (We certainly will.)
Reason #10 – Customer Retention
There is no reason to lose a customer over the collection of late invoices. Inexperienced and sometimes experienced collectors can become defensive and overly aggressive in the mistaken belief that “being tough” is necessary. Professional debt collectors understand the need for flexibility and cooperation when working with debtors. And when someone does need to get tough, better an outsider than you.
Successful accounts receivable and bad debt collections take experience, time, and resources; if you don’t have them consider a bad debt or accounts receivable collection agency.