Financial viability is essential to running a business, especially for small businesses. Few companies have significant cash reserves in an emergency fund for a rainy day. After all, it’s been a rainy day for 2 years now.–. Unpaid debts are major interruptions in small businesses’ smooth running, ultimately leading to failure.
If you are a small business and have accounts in arrears, you are not alone; this happens in every other business. The major challenge for small businesses is that they do not have spare resources dedicated solely to collecting unpaid invoices. Just to compare outsourcing with internal productivity, it is not worth doing it yourself. Yet we are all hesitant to throw good money after bad and cut our losses. This is exactly how a small firm should engage a commercial debt collection agency to help you with unpaid invoices for your business.
However, most of the time, the small business owners hesitate to hire a debt collection agency and find them not worth it – because the owners assume these agencies only work for large-scale businesses or they will be spending money on the recovery. To make it clear, these are just myths. Debt collectors offer many different types of business models. Some are based on gaining fees from their clients; others, like eCollect, only make money when they successfully collect for you.
Here are some of the reasons why small businesses should not hesitate to hire a debt collection agency:
Timely Recovery
Nothing can be more valuable than time for a business. If a customer owes you money and they haven’t done business with you in more than a year, the chances are that it is because they owe you money, and you might as well have it.
Also, the chances of recovery decrease as time passes. Hiring a debt collection agency can create a sense of urgency among your customers, driving them to pay the debt quickly.
Build Repeat Business
While collecting the debt, it is important to preserve the customer relationship, and a person who is not an expert in the field can sometimes go wrong. A debt collection agency ensures your relationship with your customer is not hampered at any cost and builds repeat business.
Legal Compliance
As a creditor, you have the right to collect the debt. But you should also know that the debtors have their rights as well. Laws regulate the debt collection process, and you might be unknown of the updates that happen. Professional debt collectors know the right way to collect your debt; they won’t go against the law and are educated about the rights of both parties; hence they will work ethically.
Technology
Debt Collectors use technology to trace contacts, document the progress, and share live updates and reports to the business owners with various software and online portals. So, you are free from all the hassle and can focus on your core business.
Debt is expensive
Most businesses only return a 5% to 10% profit after all costs are covered. With a small business, profit is either reinvested in the company or it is a shareholder dividend.
When a debtor owes you some money, working on 10% profit, you need to replace 10 times that to be in the same financial position. A $5,000 debt means you need to earn $50,000. If your margins are leaner than that, more.
People hesitate to use a debt collector because they have a preconceived idea of what it’s like. That same perception is why a debt collector gets paid, but they are generally not like that.
As mentioned above, eCollect is one of Melbourne’s best business debt collection agencies. They collect your debt as their own and work on a commission basis, which means you don’t have to pay anything upfront. The most significant advantages of working with eCollect are that they won’t spoil your relationship with any of your customers, as they know how important a customer is for the success of a small business.
If you are a small business owner struggling to collect unpaid invoices from customers, you should consider hiring a debt collection agency. Contact eCollect today and allow them to collect your debt while you focus on the growth of your business.