Darcey Quigley & Co Blog

10 Signs You Should Invest in a Debt Recovery Company

December 04, 2018 Gabriella Steven 0 Comments

Cash Flow is the lifeblood of any business. If left unchecked, your customers payment and credit terms could become a major issue. Here are just a few signs which may indicate that you need the help of a debt recovery company.

  1. You have experienced a significant increase in customers paying invoices beyond terms over the last few months – This is a sure sign that your credit control department might be overstretched or need some assistance. A steady increase in debtor days means your invoices are heading to the bottom of the pile when it comes to your customers making supplier payments. Often it is those who shout the loudest get paid first.

  2. Your spending more and more of your day chasing debts – Everyone in business today are time poor. Having to constantly chase debts from a specific group of clients and to be given the run around costs money and is a drain on staff resources. It is more effective to send these problem accounts to a third party. This should resolve your issues and spend the time on chasing these people down.

  3. Cash flow could becoming an issue – Cash flow underpins the financial stability of the business. It determines how much money you have in the bank and ultimately how you pay customers. When payments are being received later, this seriously impacts on how the business can operate and ultimately performs. Late payments can also be a symptom of of your financial control department being overworked and its resources stretched. This reduces the time you can spend on resolving issues regarding non-payment of invoices.

  4. Not paying your own bills on time – When your cash is not coming into the business on time your cash flow is stretched. This will severely impact on your ability to pay your own suppliers. An increase in your debtor’s days often has a knock-on effect with your creditors days. This can result in your payment terms having to be adjusted with certain clients. Therefore, it is important you receive the money you are owed faster.

  5. Your customers are now avoiding your calls and not calling you back – Sometimes it is difficult to get someone on the phone, however if your calls and emails are always going unanswered then it may be time to enlist the help of a third party. If you cannot speak to your clients, then how are you supposed to get them to pay you?

  6. Sales are increasing but your money collected is stagnant – Sales are an essential part of any commercial business and its growth. However, if your increase in sales is not reflected with the increase in the money hitting your bank account then this can cause major issues and have a significant impact on your cash flow.

  7. You’re having to put more people on stop – Increasing the number of people who are having their accounts placed on stop is usually a symptom of writing bad business, issues collecting payments or a rise in the number of invoices that are being disputed.

  8. Dealing with more and more disputed invoices – If you find the number of disputed invoices is increasing then this may be a symptom of the types of sales you are writing or that you are having issues with your product or service. It may also flag that there is an issue with your finance department with the billing or collection process. By opening discussions with a third-party debt recovery company, they will quickly identify where the issues are originating and if there is a bottle neck in the process and where it is appearing. They will also pro-actively help you streamline your processes and stop this spiralling out of control.

  9. You are looking into credit insurance – Businesses take out credit insurance for many reasons. One of the main reason would to insure against your customer becoming insolvent or customers defaulting on payment. Once way to mitigate this risk is to employ a third party to chase late and outstanding debts. Time is of the essence, with a debt recovery agent having many tools at their disposal they can quickly identify where your money might be at. They will also be experts at getting your outstanding debts paid reducing the need to take out an expensive insurance policy which covers your entire customer base and instead you may only require a selection of individual clients.

  10. You are looking into invoice financing – Invoicing financing can help your cash flow in the short term, however it can often mask other issues within the sales or credit control processes. The key issue here is that it doesn’t effectively deal with any issues with bad debtors. Although you receive your money in advance, if the company does not pay then you must pay the money back. Once it is with the finance company then you are limited to what impact you can have on collecting the outstanding debt. Going through a third-party debt collection company is a faster process and you are always in control of the approach. It is you that decides on the approach to take to recover your debt.

There are many factors which affect business and collecting payments. Employing strict credit control processes and having the ability to see what areas are causing you concern will allow you to safeguard your business against late payers and bad debtors.

To discuss any of these items in more detail or for free general credit management advice, then please give us a call on 01698 821 468 or email us at marketing@darceyquigley.co.uk

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