Commercial Collection Agencies Are An Important Part Of Your Business' Positive Cash Flow- Here Are Some Reasons Why

By David P. Montana

No matter what the size of your business is, positive cash flow is a crucial element, which means that collections should be one of your top priorities. At the same time, collections is a process that makes a lot of people uneasy, meaning that they sometimes procrastinate on doing it in favor of other, more pleasant duties. For many businesses, employing commercial collection agencies is the answer.

You may be wondering how to go about finding the right one among tons of commercial collection agencies, though. The first step is to investigate agencies to make a list of those who accept payment as a percentage of the recovery they achieve. So many commercial collection agencies do this that there is no reason to hire one who requires upfront payment. If they are confident in their abilities at commercial debt collection, they will be content with taking their fees when they're successful.

Recognizing the time and effort required to get a new client makes the process of hiring commercial collection agencies a no-brainer. First you have to identify prospects, then pitch to them, then close the deal, then perform the actual work. At the end of this process you still have to get paid. If some of your existing clients have open receivables that have gone past 90 days, it's a lot more efficient to get a professional to obtain that money for you as soon as possible while you're working on finding new clients and getting more business from existing clients who pay on time.

Commercial collection agencies have more clout with clients than in-house debt collectors as well. Chances are if your client isn't paying on time, he or she has major cash flow problems and is playing triage with bills. The vendor who shows a serious commitment to debt collection by hiring commercial collection agencies is the vendor that will get paid first when there's not enough money to go around.

Commercial collection agencies also successfully recover the bulk of their receivables in three weeks or less. We all know in business that time is money, and getting that money quickly helps both your cash flow and your credit score. In addition, the longer a debt is outstanding the more likely it is to remain unpaid, so early recovery is extremely important in debt collection.

Commercial collection agencies are experts at recovering receivables quickly. Studies have shown that once the collections process starts in earnest, people who are going to pay are most likely to pay within the first month. Having a persistent debt collector on the case greatly increases the chances of obtaining that money in the first month.

Commercial collection agencies are more effective at the collections process because they've seen and heard it all. They know how to recognize the patterns of debt avoidance, and don't allow clients to emotionally manipulate them, which can be a problem if you're handling collections yourself.

Skip traces can also give you an idea of any judgments outstanding against the debtor, which can help you decide how far to pursue the collections process. If your commercial collection agency provides this service as part of their fee, it's a significant reason to choose them. - 31979

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