In the age of social media and rapid-fire news stories, it's important for businesses to consider their brand reputation. If your accounting team outsources its bad debt or unpaid receivables to a collections agency, it's also important to protect your brand. Quite simply, a negative experience with a collections company could sour business relationships and your branding.
Just like when any relationship turns sour, you're left dealing with the things you couldn't agree on. Unfortunately, when your good business clients refuse to pay or communicate, it may be time to bring in a mediator to ensure your assets are protected and your agreement holds up. Whether you've decided to escalate their continued late payments, write off their account as bad debt or pursue litigation, you don't have to do it alone.
When good clients go bad, here's what to look for in the best B2B collections agency.
No matter the type or size of your business, accounts receivable and collections is a valuable part of your operations and cash flow. B2B (business-to-business) accounts receivable and collections, however, is very different than B2C (business-to-consumer) for a number of reasons. In this post, we will uncover the differences between these two types of businesses and how their receivables and collections processes are different.
What is B2B accounts receivable and collections?
Owning a small or medium business can be especially frustrating when your clients are paying late or not at all. It's good to note that how you respond to these situations will affect the success of the debt collections and if you can retain the client as a customer. In this post, we will offer tips to ensuring your invoices are paid on time and we will share how and when you should send a business to collections.
Yes, a business can be sent to collections.
Read more to learn how.
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.
When the Cheesecake Factory and other retailers have announced that they will not pay rent, it can give pause to small and growing businesses who need their invoices paid. During such an unprecedented time, most everyone is feeling the panic and stress about potential loss of cash flow. It doesn't seem like a good time to ask for payment from clients or customers who may be facing their own crises.
Is there a good way to ask for payment during the COVID-19 pandemic?
As an owner of a B2B business, or even if you work in accounts receivable for a B2B business, you know the headache of tracking down past due invoice payments. While it would seem that you've done everything necessary to prompt on-time payments, there's always that one client that pays late or not at all. If you've ever considered hiring a B2B debt collection agency, you might have questions about their processes to collect what's owed. What will they do for you? And most importantly, how much does it cost?
Have you ever wondered ... will B2B collection agencies work hard to recover my company's cash?
No one goes into a relationship, business or otherwise, planning how to end it. Firing a client is an unfortunate necessity when things go terribly wrong. The first thing to determine is your last straw. This client may be:
- consistently asking for services beyond the scope of the contract.
- pushing back on everything they're paying you for.
- difficult to work with.
- not paying you for all of the work you've already done.
Now that you know you've had enough, do you know what to do next?
Here's what to say and do when you're firing a client.
One of the biggest factors determining the success or failure of a business is how well they manage their accounts receivable. Accounts receivable management is defined as the practice of collecting money that is owed after extending credit for a product or service. You may not think of invoicing as extending credit but anytime your business delivers a product or a service and has to wait on payment, you're effectively giving the other business a credit line. That payment should be received in a relatively short amount of time or your cash flow is affected.
Here are the VERY BEST practices to manage and collect on B2B accounts receivable.
When you work or partner with other businesses as your customers, it can be especially frustrating when they don't pay their invoices. B2B sales are much more complicated and require building relationships and trust over time. With this in mind, it may be tempting to take late or non-payment personally. Don't fall for it.