You’re on a budget, but you need to get paid if you want to keep your business afloat.
It’s true that debt recovery consumes some of your cash. However, overdue and unpaid accounts prove just as costly — and usually more so. If you don’t have a debt recovery plan or system in place, you’re leaving cash on the table and allowing your customers to keep your products and consume your services without paying for them. So how can your small business fit debt recovery into your budget?
Keep Unpaid Accounts Front and Center
Don’t let dormant files fall into the back of the file cabinet.
Think of your unpaid accounts as more urgent than any other file in your system. The longer you wait to address them, the more likely permanent default becomes.
Many different types of late-paying customers exist. To maximize your debt recovery efforts, figure out where each of your unpaid-client files fall.
For instance, clients that always pay but usually send the check a little late don’t require as much attention as customers who seem like they’ll never pay their bills. You can hire a professional collection agency to handle the most difficult unpaid accounts so you can save money and increase your chances of collecting.
Know the Law
Don’t try collecting on your own if you don’t know the rules.
Did you know that, if your business engages in certain collection practices, the Fair Debt Collection Practices Act (FDCPA) can categorize your business as a debt collector? This means that you must follow much more stringent rules and policies. Plus, if you fail to abide by those rules, you could get fined.
To spend wisely on debt recovery, use a reputable collection agency that uses polite, conservative efforts to collect your cash. You can always pick and choose the accounts that get sent into collections, which will help you control your spending.
Weigh the Costs and Benefits
Who doesn’t like to see cash roll in?
Small business debt collections can get expensive if you choose a collection agency that fails to get results. Look for a firm that boasts excellent profit recovery ratios and that explains to you exactly how they’ll collect your money.
If your unpaid accounts suddenly get satisfied, you’ll receive a welcome influx of cash. This means that you can spend your money on upgrading your office system, exploring new products, or testing new services.
Many small businesses fail to grow because they don’t have hard-and-fast debt recovery procedures. Instead of collecting money from existing customers, they spend their cash on acquiring new ones. While you always want to bring in new leads, you don’t want to leave a pile of cash on the table.
If you’re tired of swimming in a sea of unpaid debt files, we’re here to help. At Rocket Receivables, we use a two-stage collection process that helps our clients boost their cash flow. Get started today and you’ll quickly see why Rocket Receivables has become the go-to debt collection agency for businesses like yours.