A Reliable Debt Collection – System Need of the Hour

In today’s fast-growing globalised business environment, an organization may fail to have enough time to pester debtors for settling their debts. Business is growing and workload is increasing. In such circumstances, it is natural to ignore debt collection from “excuse-making” debtors.  We may consider them as bad debts and may decide to move on. But the question is – Can we afford to do so? Can we just forget about our hard-earned money like that? The answer is “NO”, we CANNOT. Debtors are the assets of our organization. If we fail to recover money from them, we will be incurring huge losses. All our hard work will go in vain. Hence, a proper debt collection system is the need of the hour. It can transform a loss making unit into a profitable one. Here’s how.

How to Treat Your Debtor during Debt Collection?

A debtor is a very important element of your business. He brings regular business to your organization. It is due to his patronage that you are able to carry out your business operations daily; else you might have to wind up your business. Hence, it is important to maintain healthy relations with your debtors so that they continue doing business with you. For this, see to it that you treat your debtors with utmost respect. Debt collection is a very sensitive area. This is where your customer relations can get ruined in a jiffy. Hence, setting up and following a basic code of conduct is essential during debt retrieval. Here are some tips that will come in handy.

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    Does The Size Of Your Business Affect Your Debt Collection Process?

Does The Size Of Your Business Affect Your Debt Collection Process?

Yes, it definitely does. The size of your business has a direct impact on the choice of method you employ for your debt collection process. A small business enterprise will have few debtors and therefore, can choose to personally carry out the debt collection process. However, this is not usually possible for large business entities that have a long list of debtors in their balance sheets. In such cases, collecting the debts personally can prove quite uneconomical and thus, the need to hire a debt collection agency arises. At the same time, a small business has a smaller magnitude of debts as compared to a larger business. Thus, the debt collection process relatively handles smaller amount of cash. This further explains why a debt collection agency needs to be hired by larger businesses and not smaller businesses. Besides, the expenses for hiring a Debt Collection Agency can prove unaffordable for the small enterprise due to smaller returns it generates; however, for big businesses, such expenses are insignificant when compared to their huge returns. Thus, it is important that you evaluate the volume of your business before considering the option of a debt collection agency.

Cloud System Vs Manual System of Accounts Payable

In the age of computers and inventions, gone are those days when manual accounting was the need of the hour. Instead, the whole world is getting automated now, and so is accounting. Nowadays, the cloud system of accounting is quickly replacing the manual accounting system. This is mainly due to the following demerits of a manual system: 1. Late Payment of Debts The manual system of accounts payable is tedious. It accumulates a lot of work by the end of the day. If accounts are not maintained in time, you will fail to get an exact figure of your debts on time, thus resulting to delayed payments. You may also be subjected to penalties and interest charges. All the more, certain allocated discounts will also get cancelled for such late payments. In the business world, such late payments of debts scare away suppliers as they no longer trust your business engagement. In worst scenarios, suppliers may refuse to conduct further business with you. Hence, adopting a cloud system that ensures quick availability of figures is a feasible solution.