Overdue Receivables Impacting Liquidity?
Updated: Jun 12, 2020
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Every lender and company has overdue accounts. These non-paying and slow-paying accounts will have a negative affect on the business.
Why not engage in specialized collection efforts to minimize the losses and delinquency rates? Many businesses may have concerns or specific reasoning for not wanting to outsource their collection functions.
Organizations are may be concerned about brand protection. A company may have reservations about partnering with an organization where the existing customer relationship may be put at risk.
Cost and expense of collection. Businesses exist to generate revenue and ultimately a profit. Some organizations will take the point of view that the expense of collecting on delinquent accounts can be done inside the organization or avoided all together. Rightfully so, all reputational and financial risks must be understood and evaluated in any organization. Let’s now examine the benefits a business could stand to realize by expanding their collections process beyond their internal boundaries:
Improved recovery on debt and reduced delinquency rates. A collection agency will be able to assist in executing the proper strategies to maximize the return to the business based on factors including delinquency stage, asset class and the customer’s ability to pay. According to ACA, International, debt collection agencies returned over $55 billion to their clients in 2016.
Cost decrease to consumers for services and the purchase of goods. Effectively executing the proper collection strategy can save money. Studies have shown reduced delinquencies and lower write-off expenses save the average consumer $396 per year due to reduced interest rates and more efficient expenditures.
Legal and Regulatory protection. The most important point is to remember debt collection is a VERY highly regulated industry. Not only do laws and regulations impact the treatment of consumers, the same laws and regulations are complex and can be difficult for a non-expert to follow properly. Debt collection agencies are experts regarding federal and state laws a company may otherwise not be aware of.
Improved analytics and consulting. Collection agencies collect large amounts of data both from clients, collection databases and consumers. Skillful collection and interpretation of this data can be used to improve underwriting and spot potential payment issues sooner in the process to improve the company’s revenue.
All the organization to focus on its strengths. Odds are most business do not offer collections as a core function. Companies may be lenders, service providers or product creators/innovators. Utilizing a debt collection agency allows a business to focus on its core competencies and ‘do what it does best.
The organization has now decided a collection agency is the best solution to handle its delinquent debt so what’s next? EPA-USA is here to help. We offer decades of collection industry experience paired with innovative, technology driven products and services. We strive to maintain legal, regulatory and data compliance so our clients can devote their resources to their core business. EPA-USA relies on trust, commitment, respect and accountability to ensure our clients brands are protected while we maximize revenue and provide the highest level of service to our clients and their customers.