Increased Revenue by Collecting A/R

Increased Revenue by Collecting A/R

By Patrick Ingegno

Unable to afford revenue losses from unpaid debts, smaller businesses are looking for answers when it comes to unpaid bills in order to collect money that might otherwise be lost.

Many smaller businesses are now turning to collection agencies to bring in revenue that might be lost through non-payment of debt. In today’s economic climate, many smaller businesses are struggling to cope with the losses stemming from non-payment of debts, which has led to more businesses turning to collection agencies to boost the chances of recouping money that would otherwise be written-off.

A number of concerns have been raised by businesses that have little experience in using debt collection agencies, including how using a collection agency will impact upon the company reputation in the community and whether the agency will treat customers properly. Aside from the value of Accounts Receivable and cash flow, the loss of the intangible asset of “Good Will” troubles many small business owners when they consider the use of a collection agency.  Many small business owners have spent years developing their “name” in the community and they hesitate to employ a heavy handed collection agency that may use unscrupulous tactics to get the job done.

Businesses can do  research if they are considering using one of these agencies in order to recoup potential lost revenue including utilizing  the collection agency’s website; but time may be limited for the small business owner who often need results “yesterday!”  Checking with local Chambers of Commerce or joining business networking groups in your community may render results.  One must remember that “bigger” is not often better in the collection business.  Many large collection agencies employ inexperienced collectors, with limited training.  A small business account would have little “clout” in the collection hierarchy of a large collection agency and your accounts would either sit dormant or be assigned to an account rep with very limited experience.  A local collection agency with roots in your community may be able to provide the resources needed to collect outstanding debt while maintaining the “good will” that the small business owner has worked so hard to develop.

Remember that there are many ways to “get the job done” and an experienced collection agency, large or small, must work within the confines of state and federal law.  There is no “silver Bullet” or “magic wand;”  collecting debt is a skill that is developed with experience and often takes a  negotiator with years of business training and a knowledge of business and collection law.

So small business, anxious to collect what is due, has choices available but should remember that the longer that they allow a debt to go unpaid the harder it will be to recover.