4 Reasons To Outsource Your Accounts Receivable
September 22nd, 2019 by New World Collections
Many businesses assume that they either can’t afford to outsource their accounts receivable and collections or they can effectively manage this process in house
However, tasks that require lots of costly resources, specialized expertise, and are not necessarily full time such as advertising and collections are often best handled by outsourcing agencies.
Collections may seem like a function that can be handled in house by a non-specialist, however, preventing past due accounts, and handling those accounts that enter into collection status may become too cumbersome to be handled without professional intervention from collection agencies and accounts receivable outsourcing programs.
Today, there’s a myriad of laws that govern the debt collection industry, and well-informed customers won’t hesitate to sue if their rights are violated. Debt collection agencies know this, which is why they are well versed in these laws. Third-party agencies are knowledgeable in both federal collection laws and the laws that govern the state in which the agency holds a license. Allowing a debt collection agency to recover unpaid debts on your behalf eliminates the legal risks involved with attempting to collect debts on your own.
SUCCESSFUL DEBT RECOVERY
Debt collection agencies have experience in collecting unpaid debts, and because of this, hiring a collection agency increases your odds of collecting delinquent debts. Your primary focus is running your business, but a collection agency’s primary focus is to collect debts. A trained professional knows the best techniques to legally coerce debtors to pay, and collection agencies post a much greater threat to debtors than you do. A collection account negatively affects a debtor’s credit score for up to seven years, and debtors often make arrangements to pay back their debts in order to avoid damage to their credit.
When collection agencies communicate with debtors, they make records of it. Should you decide to sue a debtor in the future, the debt collection agency will have thorough records of each time they attempted to contact the debtor. This documentation demonstrates to the court that you put forth extensive effort to recover the debt. Additionally, if you claim the bad debt as a tax deduction, you’ll need to have this documentation for your tax files. In the event of an audit, the IRS will want to see that you exhausted every option before writing off the debt and claiming it as a deduction.
PEOPLE PAY FASTER
When you hire a debt collection agency, people pay you faster and more often. Some debt collection agencies offer services that accelerate the payment process, so you get your money faster. These services work with your existing billing process. When you use a debt collection agency, you won’t have to spend time chasing down your customers. It saves you time, money and energy, so you’ll have time to focus on what’s really important – your business.
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