Increase Your Cash Flow - Outsource Problem Receivables

Increase Your Cash Flow - Outsource Problem Receivables

In other articles I have stressed how YOU should handle your receivables. I am a firm believer in managing your own accounts yourself in most circumstances. However, from time to time two to three accounts in your receivable mix just will not call back, discuss, or pay. At this point, I think it's time to get outside help and intensify the contact and negotiation process.

I do not believe in using collection agencies except for final action with a former client. The goal is always to get our money and keep the client. Consequently, what I am recommending here is outsourcing these few, aged problem accounts to a accounts receivable management firm (ARM) who can call more consistently, use their expertise to negotiate for you, and try to get your money while keeping the client. These firms operate transparently as your receivables department and can have major impact.

These ARM companies can charge a percentage of monies collected, a flat fee, or a monthly subscription. I prefer the subscription option because you know your costs and it brings consistent coverage. This type process can cost you about $ 0.19-$0.20 per day, or less than $5-6 a month to work your accounts. While with contingent fees, you pay nothing if nothing collected, the ARM company is also likely NOT to spend much money/effort generating payment on your account. The flat fee option can work, but promotes the tendency for you to "check" the account all the time and "pull" it back if you aren't happy. This process takes a little time for consistent results, and an inexpensive subscription company is the best way to get the results you want.

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