The article Debt Recovery Of Outstanding Business Debt Becoming Increasingly Critical For SME Survival – Profess comes from a debt collections company in Australia. SME is a European business term which stands for Small and Medium Enterprise. However, the concept of debt recovery is very pertinent to every business in the United States who issues credit to its customers. All business owners know that the problem of debt collection is never more challenging than in tough economic times.
The amount of bad debt that any business writes off without collecting affects the success and profits of that company. The more effective your debt collection system, the quicker you collect your outstanding debts, and the less bad debts you have to write off. Debts are proven to be less likely to be collectible the older than become and the longer they are outstanding. This not only affects your company’s bottom line profit, but can also cause tremendous differences in your cash flows as well. Increased cash flows are something that every business would like to have access to on a regular basis.
Many business owners don’t like to deal with the past dues accounts and tend to procrastinate contacting the clients who are overdue with their payments. This makes the problem get even bigger as the amount of outstanding debt rises, and the cash flows drop. There are then the added problems that come with lack of funding. Incurring increased debt for your own business becomes necessary, and difficulty paying your own payroll and other payments due can be a burden. It is imperative that you collect for work performed, or you won’t be able to be as successful as you should be, and may even be forced out of business if the problem becomes too big.
“By neglecting debt recovery, enormous pressure builds on the cash resources of a business” says Jos Basson, Managing Director of Debt Recovery Queensland. “Too often we see poor debt collection practices leading to total business failure, due to cash flow problems” he says.
There are simple systems that can be put in place to help keep your bad debts to a minimum, such as having valid signed contracts and customer information on file. Education of employees, particularly any employee having direct customer contact, is also invaluable to your success in collections. Having a regular collections schedule and contacting clients BEFORE the debt has gotten old is a must. There should be a staff member in charge of your collections process just as there is someone in charge of answering the telephones. This function can be outsourced to a company who provides this service, or in house employees can be trained to perform this vital function.
NewStart Bookkeeping & Payroll can help you with any questions or training you may need in this area. We also have training and can provide you with debt collections services.
Let’s talk about how we can help you. Call us today at 334-246-1164 or email us at [email protected]