Every business, big, medium, or small always has what is known as “receivable income” in the form of dues that are owned by customers. For instance, if you check on Accounts Statement, you will see a column denoting “bad debts.” Recovering some of these amounts is possible through long procedures. According to reputable accounting firms such as CBE, collection agencies recover over $40 billion annually. The following are some of the benefits of using the services of a collection agency.
Bad debts are complex
Internal accounts departments are responsible for collecting the amounts that are due to the company. Bad debts are known to require a lot of effort, time, and skill that may require extensive training. The fact that the process of the collection can be faced with delays, you can hire a company that is specialized in collecting such bad debts. You need to understand that delays can cause a lot of losses to the company. Thus, it is necessary to recover money at the right time.
Paying sales team commissions
Most companies do not pay commissions to their sales persons if their clients have not paid their debts. The problem with this is that the sales team ends up spending a lot of time trying to recover the money instead of doing sales generation and actual sales for future revenues. This can have an enormous impact on business revenues.
Acquiring new customers
The process of acquiring new customers can be an expensive task. However, retaining the existing ones is a key factor in longevity and success of each business. Playing dirty games in debt recovery from the existing customers is not what most businesses look forward to since it may have adverse effects on them. Using notices for recovering bad debts spurs the company or person owning the money into action without affecting the relationship with the company.
You can pay the debt collection agency a fixed salary no matter the amount of money collected. In this way, you can save a lot of money that you would have spent on paying extra salaries and additional effort and time to train collectors. The majority of businesses only pay debt collection agencies once the money has been recovered. Businesses operating in financial sector like banks, extending the line of credit to the new customers or existing customers is dependent on keeping the aging receivables to a minimum. It is only by fueling growth that banks succeed in achieving their revenues and targets.