It happens to all businesses: the need to deal with past due accounts. Some of the commercial accounts may be small and you may not understand exactly how leveraging commercial collections can improve your bottom line. Of course, for past due commercial accounts that are high value, you understand just how much they can affect your bottom line. Here are 3 ways that using commercial collections may improve your bottom line regardless of the size of the past due amounts.
Outsourcing Commercial Collections Frees Up Staff Resources
When it comes to commercial collections, you have options. Your business can start the collections process on its own. This may seem like the least expensive solution to collections, but you're putting in more internal resources into collections instead of into building your business. Another option is to involve a third party commercial collections agency. They may work on commission (by keeping a portion of what they recover) or they may be in the business of debt buying. While you most likely won't collect the entire amount that is owed to you, you'd still get paid something. Collections agencies are, however, limited in their scope of collecting a judgment. Your third (and best) option is to speak with a commercial collections attorney to learn about your legal options. It may seem more expensive to hire an attorney, but you get expertise and the ability to exercise all of your legal options to recover the money that is owed to your business. This could increase your profitability while decreasing staff resources.
You Plan to Get a Business Loan in the Future
If you plan to get a business loan in the future, you must do everything possible to make your bottom line healthy. Commercial collections play a role in this. When you apply for a business loan, you'll need to turn over financial documents as well as internal documents related to your incoming funds and outgoing expenses. Past due accounts damage your cash flow and could endanger your ability to get a business loan at an affordable interest rate. Leveraging commercial collections can improve your bottom line and make it more likely that your lenders will look at your financial documents in a favorable light.
Your Business Potentially Avoids Legal Issues That May Arise During Commercial Collections
Commercial collections aren't always as straight forward as you may think. In addition to various federal and state laws, there are also statutes of limitation as well as debt validation requirements. Using your own staff could mean using employees who have very little or no training in this area. This can open you up to serious future legal problems that could result in expensive lawsuits that could ultimately shut down your business.
It's All About Your Future Goals
How you decide to handle commercial collections should be based on the future goals of your business. Always think about business resources, time spent building clientele versus collections, and your future needs to immediate funds.
For more information on collecting a judgment, contact experienced commercial collections attorney Ronald P. Slates today.