3 signs it's time to outsource your debt: Part 2

Outsourcing your debt can give you peace of mind and allow you to concentrate on the core tasks that matter the most to you. Last week, we saw the three signs that it's time to outsource your debt: overworked staff, time wastage and the difficulties in monitoring overdue debts associated with your customer base.

Today, D&B Small Business presents three additional warning signs - if you notice any of them in your business, consider handing the reins over to a third-party debt collector.

Overdue accounts are being passed from one employee to another

Handing overdue accounts from one employee to another can be a sign of an inefficient receivables management system. It creates confusion amongst staff members as to who is responsible for what task and increases the number of human errors, particularly in the absence of an adequate handover. This can also discourage debtors from paying their bills if they have to re-explain their situation to more than one person.

Streamline this process by calling on an independent third-party collector, who will likely have the resources and staff to manage each account for you.

It's costing you more money to retrieve your debt

Collecting debt costs money. Not only does it mean you're not getting the money owed to you on time, but also increases your printing costs, telephone charges, transport costs, manpower and even legal costs. In some cases, the cost of collecting debts may exceed the debt itself!

Also consider the opportunity cost - what could you be doing with the time and money spent on debt collection? You could use the extra time to balance your books, and the extra money to invest in new equipment or marketing software. In this case it may be more cost-effective to outsource your debt, which will also incur a fee, but this will likely be less than how much you will spend collecting it yourself.

Your collection procedures fail to recover money that's owed to you

The collections process is not an easy road. Dealing with difficult debtors involves numerous follow-ups over an extended period of time, increases operating costs and may even result in a debt write-off. Debt write-offs, which refer to invoices that have failed to be repaid in the past 12 months, are likely never to be paid. You may want to avoid this by outsourcing your debt after your best collections efforts are exhausted after the first few months.

The benefits of debt outsourcing are plentiful and include receiving your cash back sooner, a reduction in costs/manpower and the ability to refocus on core functions. If your business is displaying the above warning signs, you may want to sign up to D&B Collect, a collections service tailored to SMEs that have only a few debts that need chasing.

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