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:
Various challenges arise in managing commercial collections, primarily recovering the amount that would otherwise serve as your revenue stream. However, most businesses need to act faster and end up with considerable debt that needs to be recovered to revive cash flow. This is among some of the significant challenges in commercial collections. Let us explore how commercial collection challenges can be managed.
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.
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.
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.
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.
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.
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.
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.
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.
