Six Advantages of Outsourcing Your Debt Collection

Wednesday 17 May, 2017 | By: Default Admin | Tags: cash flow, cash management, cash terms, recoup debt

Outsourcing the collection of outstanding debts is not only more effective; it also makes good business sense.

(1) Experts have expertise!

In business, whether it’s human resources, accounting, banking, marketing, logistics, cleaning, or debt collection, it simply makes sense to outsource to an expert. Commercial debt recovery is a highly specialised field. Finance skills aside, there are people skills, negotiation skills, communication skills, and certain personality types that are required to get the job done and secure the best outcomes. Commercial agents have specialised training, experience, and qualifications, and are required to hold a government-issued licence in most states. Creditors have a range of options when it comes to collecting what’s owed to them, but it can get complex, emotional, and escalate quickly, so it pays to have an expert on your side.

(2) The right tools for the job

 In commercial debt collection, ‘best practice’ means keeping up with the latest technology, software innovations, and industry benchmarks to ensure optimal results. Commercial agents have access to dynamic, tailor-made, integrated software packages. These tools help ensure full compliance with legal requirements, allow debtors to self-serve, and offer advanced reporting features that help to keep clients in the loop around the clock. Additionally, access to specialised, subscription based packages and databases mean that an external commercial agent may be able to efficiently track down debtors that in-house teams may have difficulty finding.

(3) Relationships matter

Good relationships in business go a long way, and it can be easy to get emotional when seeking payment for work that you have personally delivered when it’s overdue. By outsourcing your collections you won’t have to make that awkward call to your clients seeking payment of an outstanding invoice. Time spent with your client is more valuable: discussing their needs and your sales opportunities rather than chasing up late payments. Debtors with short-term cashflow concerns may also be more comfortable discussing a payment arrangement with an independent third party, meaning payment is not ‘put off’ because the full amount can’t be paid straight away. Commercial agents know how to maintain the delicate balance between recovering money from their client’s debtor while still maintaining good relationships between the client and their customer. When you call in an external expert, the emotion is taken out of it. No one gets ‘off-side’ and the outstanding invoice is more likely to be paid in full.

(4) It’s a minefield out there!

Commercial debt collection is a highly regulated industry that is subject to continually changing laws and policies. Businesses that attempt in-house collections risk hefty fines, penalties, and  non-compliance when it comes to legal matters if things escalate. A good commercial agent will know exactly what to do in more complex collection scenarios when it becomes necessary to escalate to the next level. Whether it’s taking the issue through the courts, or writing off a bad debt, your commercial agent will know exactly what to do in order to minimise regulatory costs and ensure full compliance as well as achieving the right outcome. Debtors’ rights are expanding and constantly changing. There are strict regulations that differ from state to state, as well as federal laws that must be adhered to when it comes to contacting debtors. Getting it wrong just once could cause costly penalties and put your reputation at risk, so it makes sense to leave it to an expert who knows the rules back to front.

 (5) Faster recovery = better cash flow

No accountant has ever congratulated a business on the size of their accounts receivable. Overdue invoices have a negative impact on your balance sheet and cashflow. Being paid on time and in full means your business will be less reliant on overdrafts and can use the funds to expand operations, secure new stock and invest funds. It’s all about the bottom line. Experience also tells us that the longer debts are left unpaid, the higher the chance becomes that the debt will turn ‘bad’. Swift recovery action from an expert means the money will be in your account faster.

(6) Slash operating overheads

 It’s costly to pay an in-house accounts receivable team. Wages aside, there are hard costs involved that really add up: leasing expenses, electricity, superannuation, workers’ compensation, the list goes on. Outsourcing reduces wastage: by calling in an expert commercial agent when you need one, you only pay for work when it’s necessary and when it’s done. Normally, fees are paid on a contingent basis, calculated on a percentage of funds collected. Collection costs may also be recoverable and any non-recoverable costs are generally tax deductible*.

Ready to call in an expert?

At Optimum Recoveries, we’re highly skilled negotiators who achieve results by being tenacious and firm, but never heavy-handed or aggressive. We respect your brand and reputation and we’ll keep you informed at all stages of the debt cycle. Our approach to Debt Recovery is:

– Positive, firm and highly successful

– Intelligent and commercially sound

– Cost-effective and customised to your business

– Professional, respectful and ethical

– Focused on maximising results while protecting your brand

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