Difficult receivables happen even in an enterprise that selects its business partners in a very careful way. The reason for the delays in payments may be bad will of the business partner and sometime change of their financial situation. These are factors that are hard to anticipate and that we have no influence on, regardless of the fact how carefully we try to run our business.
Nevertheless, the most worrying is the fact that vast majority of entrepreneurs takes no actions aimed at recovery of the payments not paid timely, thus exposing themselves to losses and occurrence of the debt that is difficult to enforce.
Why is it so? Because of the fact that only few large companies can afford maintenance of internal debt collection departments. If they have a disintegrated portfolio of customers, it is profitable for them to invest in specialised personnel and software for management of the debt collection process. On the other hand, other entrepreneurs find themselves in an inconvenient situation which raises such questions and doubts as:
- Which employee should be ordered with the debt collection?
- How should they contact the debtor? What to do if the attempts are unsuccessful?
- Should we refer the case to court? Who should do it?
- Does the sales person collecting debt from their customer spoil their personal relations with this customer?
- Will their actions be effective if they do not have specialist knowledge?
On the other hand, a lot of entrepreneurs are afraid that outsourcing of debt collection from a specialised company from the receivables trade industry may harm the relations with the customers.
But entry of a professional negotiator having legal and economic knowledge as well as realising what schedule of payment does not threat continuation of activity by our customer in the debt collection process is the know-how that is not possessed by the majority of the internal debt collection departments or company employees realising this task on an ad-hoc basis.
Only a minor percentage of companies summarises the cost of own debt collection actions as well as their effectiveness. The attempt to calculate what is statistically the amount of costs falls per one zloty collected by the company employee in a given period is a daredevil task. The reluctance to outsource the debt collection process results from the wrong conviction that the costs of such outsourcing will consume the margin. But we make settlements with the debt collection company on the success fee basis and the amount of the commission is expressly determined in the agreement while our own costs happen to be a riddle.
Published on: 9 November 2016