How a Good Debt Recovery Partner Will Grow Your Business
Running a business involves overseeing diverse business operations, including sales, marketing, HR and benefits, accounting, customer service, risk management, and business development. Each aspect of business administration includes its own best practices, some of which consume more manpower than others.
Within the accounting function of a company, there’s the need to shorten the life cycle of accounts receivable, which, after so many months, accumulate as bad debts on a company’s books. Here, we look at how a good debt collection partner will help grow your business, especially by reducing your debtor days:
1. Practicing the right amount of prevention
Avoiding financial exposures due to customers who don’t pay up their debts owed to your company begins with prevention. You can work with an outside business partner to assess the risk of a new customer before opening a credit account. This includes checking the credit rating of your customer and considering other factors. One of the key factors is a credit controller’s experience and his or her gut feeling about a customer when it comes to offering credit.
2. Providing credit with restrictions
An alternative to turning down high-risk customers is to offer them credit with restrictions. A credit controller helps the company manage the risk of offering credit by mitigating each situation with tight credit control. The higher risk customers are usually fewer and are offset by customers with a good credit rating.
3. Dealing with the pressure to relax credit restrictions
As your company grows, you want to take on more customers, and you may find that the pursuit of growth includes internal pressure to relax the criteria that your company uses to take on new customers, including how their risk factors are assessed before they are offered credit. The result could include accepting higher-risk customers with a questionable degree of creditworthiness. You want to weigh the advantages of expanding your market to those customers with the risks that they won’t pay their debts.
4. Being realistic
Generally, relaxing the credit criteria for a segment of high-risk customers will not cause a significant problem and your company will experience growth. However, it’s important to have an element of security and a reliable debt collection partner to assist your accounting staff. When it comes to collecting aging debts, this kind of partner shares the workload, which may offset the stress levels of your accounting people as your company handles a higher volume of customers.
5. It should not cost you more
Working with a debt recovery partner should not increase your costs. If the debt recovery partner is experienced and you utilise legislation and contractual clauses, you will be able to recover any costs from the debtor.
6. Retain control
If you refer your debts to a third party debt recovery firm, it does not mean you have to lose control. At Lovetts, we offer clients CaseManager, an online portal that gives you an opportunity to retain control of your debts. CaseManager allows you to view case information, download copies of all documents sent and received by Lovetts, and manage all aspects of the legal work 24/7. It allows for complete transparency together with a dashboard containing key performance indicators.
7. Be robust
With higher-risk customers for whom it becomes apparent that cash flow is an issue, your collection partners can act swiftly and robustly. For example, a draft winding up petition could mean that your company will shout the loudest amongst all of the creditors your debtor has and therefore get paid first. In order to grow your company, you want a steady flow of customers purchasing your company’s goods or services, but not at the cost of giving them away for free to those who don’t pay their debts. We have worked in partnership with many companies helping facilitate its next phase of growth by collecting their debts quickly and cost effectively. A good debt recovery partner should be able to do the same for you.
Get your demo login and check out how CaseManager gives you complete control over your cases – 24/7
• Issue instructions at every stage of a case
• Instruct on payments, credits and write-offs
• Receive prompts when your input is required
• Discuss cases via internal messaging system
• Comprehensive reporting
• Download case documents (letters, email, etc)