The Worst Debt Collection Mistake You Can Possibly Make
There's one debt recovery mistake that costs more businesses more money than any other..
. and chances are you're making this ruinous mistake too! And if that's the case, when you get this out of your system and rid yourself of this simple mistake, you'll open your account recovery flood-gates.
So what is this costly mistake?
Quite simply: it's holding on to your debts too long.
What few people understand is the very predictable relationship that exists between how long an account remains unpaid and how much of that account you'll never see again.
For instance, if you were to wait 3 months before recovering an overdue account, for every dollar outstanding you can reasonably expect to recover 81 cents.
To illustrate if you've got $5,000 worth of debts and you recovered those accounts 3 months after they were due then you could reasonably expect to recover only $4,050.
Boiling this down, by giving your debtors 90 days (i.e. three months) to settle their accounts you're in effect flushing away almost 20% of your gross revenues.
Now if you have an account outstanding at six months you can expect to recover only 65 cents in every dollar owed to you. In effect you've flushed away 35% of that revenue.
And if it takes you 9 months to recover a debt you'll effectively flush half of it down the toilet.
Now from all of this there are two take home messages.
Firstly, the longer you wait the more you'll lose.
Secondly, and more importantly by reducing the time you allow your customers to settle their accounts from 3 months to 30 days you'll effectively catapult your recovered income by a whopping 20 to 25 percent! And that's without any extra effort, expense, or output.
Hopefully this opens your eyes to the massive source of untapped profit hidden inside your business. And all you have to do to unleash these profits is shorten the length of time you give your debtors to settle their accounts.
Right now you might be wondering "Just why does the value of an un-recovered account shrink the longer you let it slide?"
To get a feel for what's actually going you need to understand that for each individual on your debts ledger there's a swag of other people also chasing them for money. Now owing multiple businesses lots of money your debtor's initially survive by pulling the wool over everyone's eyes. It's not until someone applies serious heat that they make a genuine effort to pay their account.
Now as time goes by not only do more and more creditors press hard for their money but what little means the debtor may have had to pay have now dried up.
The end result of all this is if you persevere with trying to recover a debt on your own while everyone else engages the services of Professional Debt Collectors it should come as no surprise that you'll be at the bottom of the heap when it comes to your debtor deciding who they're going to pay first. It's a classic case of the squeaky hinge gets the oil. And because they know they can keep stringing you along well naturally they're going to pay their other creditors who are pressing harder before they pay you.
So by the time you eventually start applying serious heat on them the kitty is empty.
Now they say desperate times call for desperate measures. So when your debtor eventually runs out of money that's when they become dangerously erratic.
Backed in to a corner they'll either go in to hiding or they'll come out fighting. And this fighting usually takes the form of them falsely disputing the debt in the knowledge that pretty much every debt collection agency won't touch a disputed debt.
All of which leaves you high and dry with virtually no one to help you.
So as you can now appreciate, this explains why Debt Collection Agencies experience great difficulty trying to recover aged debts. And while it's easy to point the finger at a for failing to recover an old account, the harsh reality is that it's the business owner who's actually set both themselves and the collection agency up for failure.
To stop setting yourself up for failure simply give your debtors no more than 30 days to settle their accounts. By doing so you'll instantly boost your take home profits by 20%!
The Worst Debt Collection Mistake You Can Possibly Make
By: archerfraizer
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