Over 60 percent of small-scale businesses in the UK end up closing within the first three years of operation. While this shouldn’t be shocking to many because of the endless issues that business owners confront daily in their daily lives, this article will examine the most frequently-asked question of cash flow that is the reason why so many small-scale businesses shut down every single day.
There are many reasons that businesses suffer from liquidity, but the main worrying part is that it’s often aspects of the company that could eventually be controlled and controlled that lead to closure of the business. SME’s do not just require cash flow to sustain but also to expand and thrive. Without a strong cash flow it is not just difficult to run your business and thriving, but it also affects the ability of you to meet the obligations of a business owner such as paying your staff and suppliers.
Whatever how big your company an essential job that’s vital is invoicing and controlling credit. In the current state of invoicing lateness within the UK at an all-time high, according to the most recent quarterly reports, small businesses should ensure that they have proper methods and procedures implemented to reduce the number of slow payers and bad debt in order to maintain a steady cash flow position , as this is what determines the duration of your operation.
If you have an department for accounting or you simply hire an individual to handle your invoicing and bookkeeping There’s one thing that is often overlooked by businesses which could have saved the company from shutting down its business – and that’s the partnership with an experienced debt collection agency to help them with managing their accounts receivable and slow paying customers.
Many see partnering with the debt collection firm only as an option assist difficult payers or recovering unpaid debts. However, employing a reputable collection agency as an extension of your existing team, it will end up removing any unpleasant surprises and ensure that your cash flow is good and allows you to focus on the growth of your business instead of worry about getting payment from your customers.
Many businesses are beginning to recognize the benefits outsourcing certain aspects of their account receivables to a debt recovery agency. We’ve outlined seven important reasons why this might be the best investment for your business decision you make this year.
1. The time you have is precious So make the most of it.
The collection of money is the main goal and focus of their company. They chase your debts in order to reach the same goal – to be paid as quickly as they can. If you are a proprietor you must focus on running your business, especially in areas that will drive expansion, not spending energy and time chasing payment. A collection agency is typically employed to pursue the debt to reach a the best solution, while managing all necessary administrative tasks on your behalf during the entire process.
Professional collection companies is an expert in their field. Furthermore, they also have access to world-class technology that you would not have access to to ensure you paid fast.
Collectors of debt must be able to negotiate effectively, with tact and persistent, as well as having an understanding of the human psychology. In addition, they have the most current knowledge of legislation governing debt collection processes and jurisdictions, therefore they have the ability to apply tested recovery strategies to give your debt the highest priority and get the money from your client.
2. Influential
An official debt notice from a collection agency can have more significance than a telephone call or email from your account team. There is a psychological aspect that comes with having a third party involved in the sense that it signifies that you are taking your accounts receivables seriously. In addition, the debtor understands that they can’t refuse a polite demand for payment forever, because they are aware that the agency handling collection will follow a set of processes to follow to ensure that the account is paid.
3. Efficiency
It is possible to be hesitant about the prospect of the extra expense of an agency for debt collection but in the majority of cases it’s actually a much more affordable option based on the amount owed you. It isn’t cheap to establish the internal collections system you have in place, and dependent on your company this is probably not an alternative.
Even if your credit controller is diligently working to recover money owed however, there will be occasions when a creditor does not pay. When this happens then you’ll have to start additional collection actions at some point. So with a partner already in place within your business , you’ll be in a position to take care of these problems from the beginning however, you’ll have someone in place to address the issue quickly before it spirals too much.
4. Keep strong brand image
It is possible to think that using an external party to pay your debt could be a source of discontent for your client however, it could actually benefit you. A recovery company can help address the issue of late payment and allow your customer to keep their face clean when there is a valid reason for their non-payment. It also allows them to carry on business with you until the debt is settled.
5. Payment terms and processes that are serious.
When you work with an agency for debt recovery that sends a clear signal to those who do business with that you treat account receivables very seriously. This shows that you expect your customers to adhere to the terms of trade agreed to between you and them, as well as expectation that you will comply with the same.
6. Strengthens business relations
Controlling credit at arm’s length allows employees and you to keep good relationships with your customers. An experienced recovery company will operate in a manner that helps to maintain trust between your business and its clients.
7. Just as efficient, and efficient
The reasons for using the services of a debt recovery company discussed above are combined to create a more efficient solution. Your employees and you weren’t employed to continuously chase down the company for money rather, they should be focused on the work they were hired to accomplish.
A quicker resolution also means more cash flow, which means there are significant advantages over doing it yourself which is why more firms today seek the assistance of a professional debt collection agency as part of the company to help reduce bad debt.
Be aware that as an owner of a company you may be enticed to surrender the unpaid debts for a long time, and write off the debt. However, having a partnership with a debt collection agency can reduce the necessity to do this and help you collect the debt to you more quickly, resulting in an improved balance sheet and profit.
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