Debt collection and the small business
Not many small businesses can handle erratic cashflow. Cashflow is the lifeblood of any business since this is the oil that keeps the engine of manufacture or supply alive. And with so many businesses on the edge during the current economic downturn making sure that you get payment for your goods and services on time is vital for you to stay alive.
Whilst trade credit has become common amongst suppliers there is no reason for any business to be starved of cash with proper forecasting, funding lines and an efficient and effective debt collection team. But how many businesses actually want to specialise in debt collection? Surely the main aim of any business is to manufacture and sell or provide services for a price that makes money. Unless your core business is debt collection it can be hard taking time away from the core operations to make sure you get paid on time.
And this is where many companies turn to professional debt collection agencies for help.
There are many levels of service available to help small businesses stay on top of their debtors. Although there is no substitute for having a small credit control person or team looking after the raising of invoices and cash allocation getting expert help to focus on collecting cash can be a real bonus. Specialist agencies have staff that are trained in the latest techniques and use the very latest software to help them track down and collect from past due customers.
If your account is big enough you can even get a tailored service designed to seamlessly fit your business so customers are not aware that they are being contacted by an external agency. Even smaller companies get the benefit of trained competent collectors chasing their debts and usually on a no recovery no fee basis.
One thing that specialist organisations that focus on debt collection have is slick procedures and reporting. They will never miss a scheduled activity or phone call so customers cannot use age old excuses of not being contactable. Personal visits can also be arranged if necessary.
Another advantage of a specialist agency is that they can collect monies in a variety of ways. CHAPS, BACS, credit or charge cards as well as cash can be accepted where your business may not have the capability to process at cost effective rates. And they will chase all the way to insolvency if necessary ensuring that some recovery is made in virtually every case.
So there should be little need for your business to become a bank and fund others at cost to yourself. Outsourcing some or all of the credit collection process can add value to the business at a relatively small cost. Your reputation as a no nonsense operation will also spread amongst your clients helping to generate higher on time payments.
Finally, customers realise that whilst they may be able to mess you around in the hope that you will see further new business opportunities, they cannot do that with a professional debt collection company.
Choosing a credit collection company is like making a credit card comparison – there are lots to choose from so taking time to find one that has the right ethos and fit for your business is worth the effort. Once established, the long term relationship should yield dividends and take a considerable burden away from the business.