Debt collection – Do-it-yourself vs. professional services

Debt collection is important, especially for small businesses. Cash flow is the lifeblood of small enterprises. With a considerable amount of money, companies are in a better position to negotiate loan terms with lenders and discounts with suppliers. Obviously, negative cash flow isn’t desirable. While it doesn’t necessarily mean loss, negative cash flow does indicate ineffective expenditure and income. Cash flow comes from many sources, such as payments from customers.

You expect to be paid for your labour, products or services. Surprisingly, payments are late or they don’t come at all. When this happens, you have to chase the outstanding payments. When it comes to chasing debt, you have two options. You can do it yourself or not. Naturally, if you do the work yourself, you’ll save a great deal of money. You don’t have to pay somebody to negotiate on your behalf. This is true, but you’re likely to make mistakes. Engaging a debt collection agency is an effective way to get your money back.

Figuring out what to do isn’t easy. In this article, we’re going to discuss and find supporting points for both.

Do-it-yourself debt recovery

Not chasing outstanding payments is a huge mistake. Sure, you don’t want to be on bad terms with your clients, but neither can you afford to have a negative cash flow. There are bills to pay and employees to remunerate. If you don’t want to send for outside collection, then you have no choice other than chasing the debt yourself. How are you supposed to do that? When it comes to collecting payment, you might want to use the following procedures:

  • Make a friendly phone call – sometimes, a phone call is enough to get your customers to settle their invoices. Call to check on your clients. If you don’t want to do this yourself, use someone with authority, such as an executive. Some debtors refuse to discuss the problem, ignoring your phone calls or simply hanging up the phone. Avoid aggressive behaviour. Clients will put your tolerance to a severe test, thus causing you to be annoyed. No matter what happens, don’t threat. The debtor will interpret this as an attack. Highlight the consequences of non-payment and be nice. It’s a good idea to record the conversation.
  • Write a demand letter – a letter of payment states the legal claim. It’s usually drafted by a lawyer. However, you can write a formal demand letter too. Send a series of letters that escalate in intensity. It’s a good idea to save copies of the correspondence. If you take matters to courts, you’ll need those copies. Generally speaking, demand letters precede lawsuits. Sending demand letters is a good idea because it provides the recipient the opportunity to rectify the situation.

Professional debt collection services    

There are many options when it comes down to chasing outstanding payments. One of them is engaging the services of a debt collection agency. Debt collection agencies are able to talk to your debtors and settle get the necessary payment. Usually, the professionals tell consumers to make payments. If this doesn’t work, then they take further action. Collection agencies dispose of advanced tools, which is the reason why they are able to successfully pursue the payments of debts owned by.... Your cash will be recovered in a timely manner and you enjoy legal protection. In case you didn’t know, there are many laws and regulations governing the debt collection industry. Specialized agencies are well aware of these laws and regulations, so there are no legal risks involved.

The thing is that you can try to chase outstanding invoices on your own. Whether or not you’ll be successful is a matter of luck. Instead of relying on luck, you should better put your faith in a debt collection agency. For the small business, outsourcing debt collection is the best course of action. Writing off the debt isn’t a good idea. Do you know why? Because it will affect your ability to get a business loan. A professional service has a good understanding of techniques, technology, as well as compliance issues. Keep in mind that there is a right way and a wrong way to collect business debt.     

Which is better?

Handling the debt collection process is your main responsibility. At least, this is what AR Legal Collections tells us. A high number of small businesses place collections as a low priority and end up insolvent. So, what are you going to do? You can make one or two phone calls. If you see that the debtor doesn’t want to pay, despite the fact that you’ve done a great job and it’s kind of late, engage a debt collection agency. Conducting public shaming isn’t going to do much good. Clients have their eyes on you and you can’t make mistakes. A reputable agency will take care of things in a jiffy. Nobody will find out about the incident.

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