In the US, small businesses account for almost half of the country’s economy and yet a majority of them experience late payments. Up to 25 percent of them claim having to wait 20 to 30 days past the payment due date before they can receive payments for products or services. Late payments affect small businesses disproportionately, impacting their cash flow, their inventory purchasing, and more. If you own a small business in Philadelphia and struggle to get paid on time, turning to a small business collection agency is the quickest way to get paid.
Read on to see how a debt collection agency can help get your business back on track.
1. Hire a Small Business Collection Agency to Recover Early
Companies have a better chance of getting payment on overdue bills when those debts are less than 90 days old. As more time passes, collecting gets more difficult.
Small business owners have to deal with countless tasks at any given time, making focusing on collecting overdue bills within those first 90 days more difficult. A small business collection agency only has one focus: to get you paid.
They can dedicate their time and attention fully to collecting debts, which allows them to get quick results.
If the debtor severs all ties, stops answering their phone, and is otherwise unreachable, skip tracing can help you track them down. A debt collection agency will also have access to public record databases and credit reporting devices. They can help with data modeling so you can prioritize accounts, as well.
Debt collection agencies know that every business will have different needs when recovering unpaid debts. They will offer a variety of debt collection programs, letting you find the one that works best for your business.
Some agencies will pursue debtors for a fixed rate while others ask for a commission on every debt they recover, letting you maximize your debt recovery budget. Some also help if you want to sell the debt and write it off as tax losses.
4. Detailed Documentation
A small business collection agency will keep detailed documents of every contact they made with the debtor. If you decide to take the debtor to court, all of this documentation will come in handy. You will be able to show in court that you made extensive efforts to contact the debtor and get paid.
If you want to claim bad debts as tax deductions, you will also need all of these documents. In the event of an audit, the IRS will want to see that you exhausted every option for recovering the debt before writing it off.
5. Legal Protection
The debt collection industry is regulated by Federal and State laws and different types of debts may have varied regulations that apply to them. You will likely not know what these are, which could land you in legal trouble when pursuing a debt. If you hire a debt collection agency, they will ensure everything is above board.
The right agency will have a good understanding of the Fair Debt Collection Practices Act (FDCPA), as well as how the statutes of limitation vary from state to state. They will know the different rules that can affect how and when a business can attempt to collect a debt.
Medical collection agencies, for example, know how to work with compliance and privacy laws. They will ensure their staff follows high ethical standards at all times. Not only will they protect you from legal trouble, but they will also protect your brand.
6. Experience and Advice
Not all delinquent accounts are the same and they should not be handled in the same manner. A debt collection agency with years in the industry will know how to tackle each type of debt correctly.
The right agency will work with their clients to come up with debt recovery strategies customized for every situation and every type of debt.
Because they specialize in credit management, debt collection agencies can also offer advice on how to strengthen your business’s financial position. They can offer strategies on how to increase cash flow and how to get out of debt. They will be able to provide tools to help you screen prospective clients to help you avoid payment issues in the future.
7. Added Sense of Urgency
When debtors start receiving letters and phone calls from a debt collection agency, they tend to pay attention. It lets them know you are serious about collecting the debt and that you will not just write off the unpaid invoice. Knowing their credit could be affected and that there could be other legal repercussions will get people to act and can get debts paid more rapidly.
8. Boost Cash Flow
The most common reason small businesses fail is a lack of cash flow. Cash flow makes it possible to purchase inventory, pay bills, make investments, and more. Delinquencies and bad debts will not allow the business to maintain that reliable cash flow, making it difficult to stay competitive.
Hiring a debt collection agency can help reduce outstanding receivables at a higher rate than if you tried to do it on your own, increasing your business’s cash flow.
Get Paid With Less Hassle
You have a business to run. You do not want to have to chase after unpaid invoices when you could be focusing on growing your company. By hiring a small business collection agency, you will get experts ready to help you get paid. Since debt collection agencies have the right tools and training, you will see results much more quickly.
At First Federal Credit Control, we offer personalized services that put people first. We work hard to collect debts without damaging client relationships by using a non-confrontational approach to debt recovery. We can offer exemplary results and we only get paid if you do.