According to experts, around 5,000 Australian companies will become insolvent in the next few months. This is due to the suspension of the JobKeeper program, insolvency rules, and other factors. The intermittent lockdowns also put pressure on businesses struggling to survive.
No matter the business size, credit control is paramount. But with the pandemic going on, the rate of late payments reached an all-time high. As a result, businesses must implement measures to limit unhealthy cash flow while maintaining good relationships.
Hiring a professional debt recovery agency can complement your accounts department by assisting in your receivable management.
We have outlined some reasons this could be one of your best business moves.
Debt collection is their specialty. For this reason, they have acquired tools and established connections to ensure that their clients get paid as soon as possible–chances are, you don’t have any or most of these resources.
A debt recovery agency allows you to focus on activities that drive growth rather than chase arrears.
Moreover, debt recovery agencies have up-to-date knowledge about the laws of debt collection. This means you can avoid getting involved in litigation by hiring them to collect your money.
You’re probably reluctant about hiring an external debt collector because it means additional cost. However, it’s a more practical option in most cases.
Setting up an internal collection system can be pretty exhaustive, depending on your business size.
Even if you evaluate your current credit controller, there are times when some debtors won’t settle their dues. If/when this happens, you’ll have to take more proactive measures. By having a dedicated agency, you have professionals who can promptly deal with problematic debtors.
3. Maintain Reputation
Debt collection is a sensitive matter, damaging your relationship with the debtor if not handled correctly.
Debt recovery professionals are skilled negotiators who can demonstrate persistence with tact. They use their understanding of human psychology to allow the debtor to save face to continue their relationship with you after the debt is settled.
4. Shows You’re Serious About Payment Terms
“When you send a debt recovery agency out there, it shows you expect all parties to abide by the terms and that you’ll do the same. When you show how serious you are with accounts receivable, customer trust intensifies.”, says Credit Capital financial analyst Alister Clare.
Compared to an email or phone call from your company, a notification from a debt recovery agency has more impact. There’s a psychological element in getting a third party involved, which causes the debtor to think they can’t just ignore their duties.
A healthy cash flow is the most essential factor in business success. Sometimes you have to offer credit to accommodate the financial situations of customers, partners, and affiliates. But if the receivables are too slow, consider working with a debt recovery agency.
The procedures and policies of a professional debt recovery agency takes the laws, your brand, and relationships into consideration. Contact Central Coast Hunter Collections at DrakeGroup to learn more.