The business world would be close to perfect if accounts never went past due. Unfortunately, it is a tough reality that almost every business that provides goods or services for other businesses will eventually face unpaid accounts. Why should businesses care about commercial collections instead of just writing off unpaid accounts? Here's why.
Past Due Accounts Affect Your Cash Flow
If you plan to apply for a business loan, you must understand the impact that past due accounts have on your cash flow. Lenders will consider the amount of money tied up in past due accounts. Writing off accounts isn't always the decision that's best for your business even if it seems easier than collecting. If you want to improve the cash flow in your business, focus on commercial collections.
Older Debts Are Harder to Collect
Sometimes clients simply overlook an invoice. You call, they pay, and life goes on. At the same time, it's important to note that if you let an account continue to age, they get much harder to collect on. Stay on top of your commercial collections from the very day your collections process starts so that you have the best chance of getting paid.
Poor Cash Flow Could Shut You Down
Too many past due accounts could mean that you end up closing your doors. You need money to stay in business, pay yourself, and pay your employees. You may not be able to pay your own bills if your cash flow is poor.
Creates an Opportunity to Be a Problem Solver
When you call on past due accounts, you create an opportunity to be a problem solver. If a business didn't receive the mailed invoice, you could have the wrong address. Maybe you need to offer electronic invoices and online payment options. The client could have held the invoice instead of paying because they have questions about what they were charged. Calling on past due accounts gives you the chance to find out what's happening and to come up with a way to solve the problem. Problem solving, even during collections can help influence client loyalty.
For more information on the collections process, contact attorney Ronald P. Slates today.