Debt collection agencies may act really dynamically. Their actions are not limited to sending letters or calling. The debtor may even expect their visit on its premises.
However, recovering the money may take a long time, and practice shows that most companies wait too long before ordering debt collection. They usually do it only when they need money as soon as possible.
Until now, this problem was partly solved by operating loans that enabled the financing of ongoing activity. Unfortunately, nowadays, the requirements set by banks during recession are sometimes hard to meet for small and medium enterprises. So, let us assume that a company that does not have any securities contacts a debt collection agency expecting it to recover the debt as soon as possible. What can it expect? It is worth considering ordering the following services:
Debt collection plus advance payment: The entrepreneur receives part of the receivable in form of an advance payment immediately after starting the debt collection procedure. The remaining amount is transferred after the process is completed.
Sale of receivables: The Company may get rid of the debt by selling it. In such event, the whole risk connected with debt collection is borne by the purchaser of the receivable. The main prerequisite for using this service is to document that the debt exists and is undisputable.
B2B loan: The loan company may be more willing to grant a loan to a small company that does not meet the requirements of banks. This is a good way to obtain the funds for ongoing operations.
Which solution should you choose? It depends on the needs of the given enterprise – how soon it needs to receive cash and in what amount. The most important aspect is the fact that, even in apparently hopeless situations, the enterprise may choose from various instruments to secure its financial liquidity.
Published on: 9 November 2016