If your business works with another business, you or your accounts receivable department likely has some idea of the efforts to collect on past due accounts. Reasons for late payments could be as simple as a misplaced invoice or as challenging as being affected by a global pandemic. Whatever the reason, positive cash flow and working capital is important to keep the lights on and your employees paid. How long will your A/R team attempt to collect on accounts before they give up? Does your accounts receivable team know when to ask for professional help?
Here are seven reasons small to enterprise businesses turn to third party collections.
1. When First Party Collection Attempts are Exhausted
If your business is fortunate enough to have an accounts receivable team, they will likely be tasked with all manner of job responsibilities, including first party collections. When the attempts to collect begin to take more time than other responsibilities, such as credit management and invoicing, it may make sense to relieve them of these duties and allow a professional agency to take it on.
2. When the Invoice is 45+ Days Past Due
The longer it takes to collect on an invoice, the less likely the customer will pay in full. If the client has repeatedly been contacted during this time and payment hasn't been collected, it may be due to a lack of response from the client or a simple unwillingness to pay.
3. When the Client is Unwilling to Pay
When your client has pushed back on the invoice or has agreed to disagree on what's owed to your business, there's no need to wait 30 or 45 days past due. As long as your team has the information necessary to prove that the goods have been sent or the services have been completed, you have recourse and third party collections agency can help.
4. When Sales Needs are Urgent
If you're running a business on your own, you may not have time to chase down payments. When sales or services needs are more urgent than collections, it's definitely time to hand over the responsibility to an experienced group of agents. In fact, it's likely less expensive to work with a third party collections agency than to hire your own accounts receivable team.
5. When Time is of the Essence
When your business is growing, resources need to be reallocated or your team needs time to focus on more important back office processes, outsourcing to a collections vendor is helpful. Those phone calls or follow-up messages can be taken over by a team of experienced professionals so your staff can get back to the task at hand.
6. When You Want More Money
Not only can third party collections efforts collect more money for your cash flow, they can also help save money too. For a small fee that's contingent on actual collections, your business has years of debt collections experience and (quite frankly) really expensive tools at your disposal. Instead of making this tools and training investment yourself, outsource this task to an agency that's already dedicated to your collections needs.
7. When You're Ready, It's Free & Easy to Get Started
To learn more about how B2B or commercial collections works, click the green button below. We'll walk you through the process and allow you to get started with third party collections. Whether it's one invoice or one hundred, let us know how we can help.