How much is too much?
We spend a lot of time on the phone with prospective clients and the usual first question is “What are your fees?” As consumers we all want to feel like we are getting a fair deal. This is a normal question under normal circumstances.
When looking for a collection service provider it is tough to set the commission/fee question aside while evaluating the more important question: “Will this agency do everything they can to collect my money and provide me with timely feedback so I know what is happening?”
The fact is you may have already lost 100% of your money to your non-paying customer.
Be prepared to pay commission fees as high as 50% on accounts that are older than one year past due. 50% on something is far better than 100% of nothing.
Monday, October 24, 2011
CASH FLOW CHECKLIST
On a scale from 1-10 with 10 being “really excited” and 1 being “not so much”, where does the job of calling your customers for money fall…honestly?
During our conversations with dozens of accounts receivable clerks and credit professionals, almost 89% would rather avoid it if they can. Many tell us that they are busy with current customers and just don’t have enough hours in the day to follow up on the slow payers.
As a business owner, I understand the need to service your current customers. What many owners fail to consider is the actual cost of allowing customers to use you as their banker. Let me explain. If you have $500,000.00 in receivables and your Line of Credit cost 4.00%, you must pay $1,666.67 per month in interest costs. There are many other costs such as missed opportunities to put your money back to work etc.
To counter this drain on your profitability, we recommend developing a set of daily, weekly, monthly, and quarterly key performance indicators that your credit and accounts receivable staff can follow. If this checklist system is developed and followed consistently, the return on your investment will be immediate. If you would like to investigate this further, please visit our consulting division at www.creditprocessadvisors.com for a confidential consultation.
During our conversations with dozens of accounts receivable clerks and credit professionals, almost 89% would rather avoid it if they can. Many tell us that they are busy with current customers and just don’t have enough hours in the day to follow up on the slow payers.
As a business owner, I understand the need to service your current customers. What many owners fail to consider is the actual cost of allowing customers to use you as their banker. Let me explain. If you have $500,000.00 in receivables and your Line of Credit cost 4.00%, you must pay $1,666.67 per month in interest costs. There are many other costs such as missed opportunities to put your money back to work etc.
To counter this drain on your profitability, we recommend developing a set of daily, weekly, monthly, and quarterly key performance indicators that your credit and accounts receivable staff can follow. If this checklist system is developed and followed consistently, the return on your investment will be immediate. If you would like to investigate this further, please visit our consulting division at www.creditprocessadvisors.com for a confidential consultation.
Subscribe to:
Posts (Atom)