How Third Party Collections Can Benefit Your Corporation’s Bottom Line
You have a business that is structured like a corporation. Like most other corporations, you have clients with delinquent accounts. Did you know that assigning these delinquent accounts over to a third party collections agency can benefit your corporation’s bottom line? It’s true!
Reducing Write-offs
You may be tempted to write off a lot of the delinquent accounts. This could be because maybe the majority of the delinquent accounts aren’t for large sums of money. So, you might think that it’s more economical to write it off than to assign it to a third party collections agency. This isn’t necessarily true. Write-offs affect your bottom line. When you place accounts with third party collectors, you’re increasing your chances of collecting the money that is owed to you. Even if you don’t collect the full amount that is owed, you have an opportunity to at least collect some of what is owed to you and reduce the amount of write-offs for your corporation.
Improve Your Capital
Remember the last time that you approached a lending institution for a loan? If you made it past the initial application, then you know that they also request a look at your accounts receivable. This helps the lender determine if your corporation represents a risk that they are willing to take. Your accounts receivable plays a direct part in determining how much money they will provide and at what interest rate. When you place your collections with a reputable and experienced third party collections agency, your accounts receivable is in better shape. This improvement in capital can increase your chance of receiving the loan that you need to help your corporation continue to grow.
Reduce Costs
All of the costs that your corporation incurs obviously affects your bottom line. Placing delinquent accounts with a third party collections agency can help your corporations reduce costs. Reducing costs will mean a healthier corporation.
First, it reduces the costs of any interest that your corporation pays out for services. How does this happen if you provide your services directly to your clients? Well, if you have revolving accounts or credit lines in order to keep your business going, you have monthly payments. Those monthly payments often include interest. Collecting on past due accounts means that you have more money (as opposed to not collecting or writing the debt off) that you can use to pay down your own account balances. When you pay off your account balances sooner, you save on interest.
Second, outsourcing to a third party collections agency is often around 40% less expensive than if your corporation were to hire and train an employee to do collections. Yes, that’s right: 40% less expensive on average. Saving costs and also bringing in the money that you’re owed can greatly affect your bottom line.
Clients A.R.M. knows that the idea of outsourcing can be a little scary. To help you ease into the process, we offer a free process review. This free review will show you where your entire accounts receivable process can be streamlined and improved in order to minimize future delinquent accounts. You will also learn just how easy it is to get started with us. Clients A.R.M. account management representatives have a minimum of 15 years of experience. We know the law and we know how to work with people to get you paid. What are you waiting for? Book your free review!
