Most businesses need help recovering unpaid invoices from services and goods rendered to other companies that land them in a situation of low cash flow. The lack of funds and revenue creates issues with low cash flow that can hinder business growth and prevent new projects from getting piloted. Businesses also struggle with regularly repaying their debt because there is less focus on financial management, creating an upward trajectory of debt in the U.S. Businesses need to know how to maximize recovery potential in commercial collections to mitigate any risk of low cash flow and capitalize on revenue to fund future projects. Connecting with debt collection agencies specializing in commercial collections can be a way to maximize recovery potential and create a more affluent foundation for future projects while maintaining a robust internal operational system that benefits the company.
There are various ways that companies can ensure they secure their revenue and take necessary steps to maximize their cash flow without depleting internal resources, one of which is engaging debt collection agencies at the earliest step possible. Most businesses need to take control of their accounts receivable and end up with the pain of collections, disrupting their hard-earned customer relationships. Here are a few ways that businesses can maximize recovery potential in commercial collections by strategizing A/R recovery:
Act fast – Anticipate Accounts Receivable Hindrances
Often, a business needs help with its accounts receivable, or the pile of unpaid invoices grows. However, most companies would first try to manage collection processes internally, re-routing the energy and time of their employees in collecting unpaid invoices from other businesses. But it only weakens your internal team and puts strain on them to manage business functionalities and collection efforts.
A faster and more effective way of managing collections is acting fast. The sooner you realize your accounts are getting old and will pose cash flow issues, the higher the chances of collection. Please do not wait for your accounts to become past due their repayment stage because customers will become less initiative-taking in paying their outstanding dues the longer you wait. When an account goes a few days past its payment date, contact the customer and demand repayment for their outstanding debt.
Another aspect of early measures for collections is to engage a collection agency that specializes in pre-legal collection strategies early in the process of early-stage collection. A commercial debt recovery agency can implement collection efforts on behalf of its clients and recover the debt without threatening customer relationships. Engaging commercial debt recovery agencies ensures that you can free up your internal team to focus on their core competencies and outsource collection efforts to a third-party debt recovery agency for business debt recovery.
Developing Flexible Payment Plans
Each customer that acquires your goods or services is different and would have different circumstances. Customers who acquire these services or goods on credit significantly often need help in repayment due to financial stresses or unforeseen circumstances hindering timely payments. Companies must foresee this issue and devise payment plans catering to these changing circumstances. Hence, there is a safety net when collecting efforts to stop accounts from becoming more delinquent. Businesses should provide multiple payment options like installments, grace periods, partial payments, and discounts for timely payments to encourage customers to pay per schedule.
Implement clear payment terms so that customers are aware of their payment responsibilities. Set realistic timelines, considering the customer’s financial situation, and providing them with grace periods to make up for their overdue payments. Another significant allowance you can make is providing various payment methods. Everyone may not be able to pay through cash or bank payments. Allow customers of different ages and circumstances to pay via online payment portals and platforms, cheques, and bank transfers to ensure that the customer has adequate options to repay their debt without any hindrances.
Maintaining Professional Communication with Customers
Businesses often miss a big part of collections that makes all the difference to maximize recovery potential in commercial collections. Retaining customers and fostering positive customer relationships is essential. 80% percent of customers sent to collections never return to your business. This statistic is a grim reality of collections because recovering unpaid accounts means putting your customer relationships at risk. There is a phenomenon known as customer lifetime value, which is the metric that judges the estimate of total revenue a customer is expected to bring through their relationship with your company. Sending customers to collections means a significant risk to the customer’s lifetime value.
Early intervention should be implemented to ensure that customers do not have it sent to collections and that the relationship continues. Another important consideration is maintaining positive customer relationships when collecting debt. There needs to be a more cordial way to communicate with customers to coax them into paying their debt. To ensure customer relationships stay the same, collection companies must implement friendly communication and gentle outreach, so customers do not feel alienated. Businesses must maintain an open door for further collaboration with their customers, which is possible if proper steps are taken to ensure a way back. Debt collection companies have trained commercial recovery professionals with experience in negotiation techniques and cordial communications to manage communication with customers without damaging professional relationships.
To streamline and speed up commercial debt recovery, debt collection companies implement negotiation techniques to encourage customers to pay within their capacity. Empathetic collection requires commercial recovery agents to listen to customers, understand their financial stress, and devise payment plans around their unique issues. This approach allows debt collection agencies to secure payments without souring customer relationships and maintaining goodwill between their clients and their customers. Even when customers do not pay and are becoming difficult to communicate with, it is essential to keep assertive but friendly communications to encourage them to pay without conflict or disputes. Debt collection agencies are trained in handling customer dissatisfaction and disputes to maximize recovery potential while maintaining positive customer relationships.
Persistent Collection Efforts with Illusive Customers
Businesses often need help with customers who are hard to locate or have moved to a new location. Companies need to utilize their internal resources to recover unpaid dues from these kinds of customers. Commercial collection agencies and experienced debt recovery agencies know how to locate those customers through innovative strategies like skip tracing and scrubbing to locate elusive customers and validate debt against customers’ names, change of address, deceased statuses, and bankruptcy. Commercial collection agencies can use their expertise to find customers and encourage them to pay or validate a debt against a claim to streamline recovery efforts.
However dedicatedly you might work on recovering debt from a customer, there are times when it just is not possible. There will always be customers who will be unwilling to pay or will have challenging circumstances where they will be unable to pay. In these cases, debt recovery agencies ensure that they devise strategies to compel customers to pay. Often, that road leads to legal collections. That is where a debt recovery agency uses its legal framework or network to implement legal collections, judgments, and settlements. Suppose a consumer is unwilling to pay a debt. In that case, the debt recovery agency will devise a plan to pursue legal collections, involving legal counsel and reporting the debt to the credit bureau. After that, the commercial debt recovery agency will ensure they devise a settlement where the customer can pay a set amount and close the debt. This is usually the last resort, but it ensures that further efforts are saved from accounts that will remain unpaid. Collection efforts can be directed toward more lucrative accounts that are more likely to pay.
Leveraging Technology in B2B Debt Recovery
Most companies will have trouble managing collections because their internal resources are less robust than when they want to tackle the issues that arise in collections. To properly carry out our B2B recovery, the involvement of a commercial debt collection agency is crucial to speed up the collection process and take the expertise of seasoned collection experts who know how to maximize recovery potential in commercial collections. Commercial debt collection agencies are equipped with the latest technology like skip tracing and claim scrubbing, as well as top-of-the-line compliance monitoring systems that can regulate and supervise collection efforts and outreach by debt collection agents to ensure every communication effort is adequately monitored and managed. Compliance monitoring systems can ensure that the calls made to consumers are compliant and cordial and that there are no regulation violations against the customers.
Additionally, debt collection agencies and accounts receivable management companies have innovative ARM software that can streamline the entire accounts receivable process, from uploading claims to tracking collection progress and keeping up to date with all payment processes and claim statuses. This software can empower companies to manage their accounts receivable more efficiently and maximize their recovery potential without compromising their internal resources or hindering their core business functionalities.
See Case Study for Software Collection by Cedar Financial
Additional Steps to Speed up Debt Recovery
Keeping a record of past due accounts and collection efforts is one part of the recovery process from commercial debt collection. The other part is knowing who your borrowers are and the risk associated with lending to those borrowers in the first place. While you implement everything else mentioned here and engage a commercial collection agency to manage your accounts receivable and debt recovery process, assessing creditworthiness and credit risks when lending to borrowers is essential. Do a credit history check, including past bank balances, payment, and spending histories, to assess if borrowers are viable for lending credit.
It would help if you also explored the possibility of acquiring credit insurance options against bad debts. If borrowers cannot repay their debt, you should be able to claim credit insurance and cut your losses. Even though this will not make much of a difference in your recovery potential, it safeguards you against significant losses, depending on the loan size you have lent and the unpaid invoices piling up in your accounts receivable. Having credit insurance will give you a safety net against major financial distresses and help you recover your cash flow so you can continue to run your business and, with enough recovered revenue, manage your recovery process smoothly.
Find a Reliable Commercial Debt Recovery Agency
Now that you have a good grasp on what needs to be done to maximize your recovery potential in commercial collections, a large portion is to find a debt recovery agency with expertise in commercial collections. It would help if you had a B2B debt recovery agency to help manage your accounts receivable and get your unpaid invoices paid to revive your cash flow.
Cedar Financial is a seasoned debt recovery agency with experience in commercial collections. If you are struggling to manage your accounts receivable and want to recover debt, trust Cedar Financial, which has industry experience, to provide you with a game plan for your debt recovery.
With over 30 years in debt collection and commercial debt recovery, Cedar Financial offers early intervention programs to work on your past due accounts that are still collectible and third-party collections where they can tackle seriously past due accounts. So, whatever situation you might face, Cedar Financial will be able to maximize your recovery potential by providing exceptional debt recovery services comprising the best technology and empathetic commercial collection professionals to maximize your recovery potential.
