Every small, medium or large company in the financial industry has accounts receivable income. In the form of a customer's arrears. If you look at the annual statement of accounts, there may be a column that says "bad debts." Or pending membership fees. Some of these amounts may be withdrawn, some will not be withdrawn, or recovered through long-term legal procedures that can last for many years. International accounting firm Pricewaterhouse Coopers [PricewaterhouseCoopers] estimates that in the mid-2000s, external collection agencies recovered $30 billion in annual debt. This is an amazing amount!
In this case, the company can process the receivables through an internal mechanism, or outsource the outsourcing of the outstanding payments to an external collection agency. These are third-party commercial collection agencies contracted by the company to use the skills and resources of the agency in recovering the amount due. Such an institution is called a debt collection agency. These institutions are governed by the Fair Trade Debt Collection Act, so they have the knowledge and expertise associated with debt collection.
There are many benefits to using a debt collection agency, including:
• The company's internal accounting department is usually responsible for collecting payments due from the company; however, accounts receivable are ageing because long-term debt requires a lot of time, skill and dedicated effort, which may require intensive training. Because the promise can cost the company a heavy price, third-party services or commercial collection agencies can handle the job specifically, so they can recover funds that might ultimately be uncollectible.
• If the customer owes money, sometimes the company's sales team that the customer owes money will not receive their responsibilities or rewards. This forces the salesperson to spend a lot of time to recover the funds, rather than making actual sales calls or sales for future revenue. This has greatly affected the income of the company.
• Acquiring new customers is an expensive task, but retaining existing customers is a key factor in the success and longevity of each business. Play the role of "bad police." Recovering debt from existing customers is not what most companies expect, as it can have a negative impact on them. The use of third-party services to send debt recovery notices usually motivates individuals or companies that owe money without seriously affecting the relationship with the company.
• In business-to-business, the unwritten policy is to extend bill payments as long as possible to allow for better cash flow. In some cases, if no payee is involved in requesting payment, no check or underpayment will be issued for the invoice.
• Regardless of the amount owed, paying a fixed salary to a debt collection agency or agent to collect debt, the company can save a lot of money, otherwise it could have been used to pay for the property, and extra time and effort to train them to effectively collect the dues. Most companies pay only to the collection agency when they withdraw funds.
Especially for companies in the financial industry such as banks, extending the credit line to existing and new customers depends to a large extent on maintaining the aging of accounts receivable. To a minimum. Only by driving growth can banks successfully achieve their target deposits and income. Therefore, by using a commercial collection agency, banks can expect to recover the amount as early as possible, maintain customer relationships and credibility, and ensure that their financial books remain healthy.
Orignal From: Benefits of using debt collection agency services
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