If you’re like most small business owners, you’re always looking for ways to improve your accounts receivable. You know that getting paid on time is crucial to the success of your company, but sometimes things fall through the cracks.
That’s where debt recovery services can help. Debt collectors have a lot of experience in getting businesses paid, and they know how to do it without breaking the law. In this article, we’ll discuss how debt collection works and how it can complement the efforts of your accounts receivable team.
1. Debt Collectors Zero In On Recovery Rates
Debt collectors are often able to improve a business’s accounts receivable (AR) through their experience and expertise within the industry. Businesses that are looking to improve their AR should consider working with a debt collection service that has a strong track record of success.
This can be proven to the small business owner by looking at the collector’s recovery rates. While no guarantees can be made in the world of debt collection, the good companies have it down to a science.
They know how much they’ve recovered versus how much is outstanding, and they use that data to build wise recovery strategies. All of this takes time and expertise that an overworked AR team probably doesn’t have.
2. Their Legal Familiarity Helps Maintain Compliance
A debt collector’s legal familiarity is another key factor in maintaining compliance with state and federal laws. Debt collectors must adhere to specific regulations, and a debt collector with extensive legal knowledge will be better equipped to do so.
Once an account has gone into delinquent status, it can create significant liabilities if you try to collect on those debts yourself. That’s because of the numerous restrictions placed on creditors via the federal Fair Debt Collection Practices Act, which most states’ Attorneys General follow.
3. Debt Collectors Are Better Equipped
Additionally, debt collectors often have access to specialized debt collection systems that can help businesses recover outstanding payments quickly and efficiently. These systems can automate many of the tasks involved in debt collection, such as sending reminder emails or making phone calls.
4. Systems Are In Place
Debt collectors are experts in debt collection strategies, so they can help you get paid faster. Some advanced debt collection strategies that an Accounts Receivable team may not be able to adequately implement include the following:
- Negotiating payments
- Maintaining a positive customer experience in a potentially combustible situation
- Handling deceptive debtors
- Creating win-win scenarios that are more likely to get the customer to pay up
It’s not always easy but with proven systems, repetition, and focus, a debt recovery service is in a better position to handle this aspect of things for your business. And your AR team will likely thank you for it!
5. Cross-Industry Experience
Finally, debt collectors typically have some cross-industry experience that can be beneficial for businesses looking to improve their AR. This experience allows them to identify common issues that lead to delinquent payments and develop strategies to address them.
The more industries that a debt recovery service works within, the better. That’s because they have an understanding of how revenue cycle management works within each business type. If there are special considerations relevant to one industry, they might also prove effective in another.
But for your Accounts Receivable team to implement, they would need to work within those industries, which they do not. For example, a debt collector could work with a business that sells to other businesses (B-to-B), a business that sells to consumers (B-to-C), or a business that sells to the government (B-to-G).
Each of these types of businesses has its own Accounts Receivable process, and a debt collector who understands all three will be in the best position to help you improve your best practices.
Debt recovery services can be an important part of improving your company’s accounts receivable. Southwest Recovery Services, for example, has a ton of experience getting our business clients paid across numerous sectors, from marketing agencies to utility companies.
We know how to do it without stepping on federal laws. We have access to resources that most small businesses don’t, making us well-equipped to get you paid faster. And we can work with your accounts receivable team to improve best practices and strategies that prevent delinquent accounts in the first place. Contact us today to learn all the ways that we can support the growth and stability of your business!