The right time to entrust your unpaid bills to a collection company

Collecting amounts owed is an important financial milestone for your business, adding to cash flow and helping to keep your business afloat.

Often, entrepreneurs make the mistake of waiting too long before outsourcing their outstanding debts to a debt collection company. Some choose to handle their debt collection in-house. However, more and more entrepreneurs are making the decision to outsource debt collection to an external partner.

Deciding when and whether to outsource your debt collection to an agency is one of the most important cash management decisions your finance department will make. But how do you know when to take the step?

Here are some warning signs that it may be time to take your debts to a debt collection company:

Your customer is burying his head in the sand

When you send your customer a strong message that it's time for them to pay, and they avoid it, that's definitely a red flag. Avoidance is not acceptable and outsourcing to a collection company at this stage gives you the advantage of “third party effect”.

Your client makes empty promises

Your customer responds to your reminders with payment promises that he does not respect. You give them payment plans but you don't see anything coming to your account. No need to grant new deadlines or plans for clearing your invoices. You need to take it to the next level.

Your customer is only making partial payments

Your customer is trying to save time or is facing financial difficulties. Contact him for a formal clearance plan. If he refuses or does not respect your conditions, do not hesitate to entrust this unpaid debt to a recovery professional. Collection companies are much better equipped to handle this type of monitoring.

Your client is making a fool of you

Some late payers find every possible excuse not to pay you. For example, they claim to be the wrong person or not to have received the invoice. A debt collection company will be able to get to the source of the late payment, identify the right person and recover your debt for you. Once again, the “third party effect” shows that you are a serious professional partner and one who must be respected as such.

By outsourcing the recovery of your invoices, you will improve your cash flow but also the efficiency and seriousness of your business.

Here are different reasons why you should entrust your recovery to a professional:

• Reduce costs and risks
  The costs of outsourcing debt collection are minimal. The majority of collection companies have handling fees and commissions such that their intervention is generally covered by the recovery. Outsourcing your collections saves you the costs and risks associated with managing an in-house collections team
• Improve your cash flow
  Optimized invoice payments improve your business's ability to maintain positive cash flow. Outsourcing debt collection not only makes you money but also frees up your time to focus on your own business.
• Maintain good customer relations
  Relationships with your customers are essential to the success of your business. Outsourcing your collection will allow your company to maintain its image with your customers. You will relieve yourself of difficult customers and thus concentrate on positive business relationships.
• Make the best use of human resources
  In a difficult financial environment, it is important to mobilize your human resources on commercial and prospective functions. By outsourcing your debt collection, you can free up your valuable staff time to focus on what really matters to your business: getting new customers and keeping them happy.
• Focus on what you do best
  Outsourcing the management of your unpaid debts allows you to concentrate at 100% on your good customers and on what you do best: your business. Freed from the burden of chasing bad payers, you can focus on optimizing your products and services as well as satisfying your good paying customers.

Working with a debt collection company significantly reduces your late payments and unpaid debts in the medium term. You gain time to concentrate on your business and its development.