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.
1.Ensures Availability of Funds and Saves Additional Cost
A reliable debt collection agency will bring consistency in your organization’s debt collection procedure. All debts will be collected within a stipulated time regularly by a dedicated debt collection team. Since they are professionals and are experts in their field, they will succeed in recovering funds from those “sticky” debtors (who always fall short of funds but will never fall short of excuses) as well. In this way, your organization will have necessary cash whenever required. There will be no shortage of funds for carrying out your regular operations such as purchasing raw materials, additional stock, and so on.
On the other hand, failure to recover debts on time may result to a shortage of cash reserves for carrying out your daily operations. Due to this shortage, you may have to obtain short-term loans from banks or outside sources. These short term loans often come […]

By |June 5th, 2014|Uncategorized|0 Comments|

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.

1.Contact Your Debtors When Necessary
You should contact your debtors whenever necessary. For example, when the due date of payment is coming closer or when you have introduced any new product in your shop, and so on. This will help you develop a healthy customer relationship with your debtor.
In this way, you are reminding your debtors about their debts while at the same time marketing your business smartly.
2.Maintain Your Debtor’s Privacy

In any circumstances, you should never reveal your debtors credit information to a third party. While reminding your debtor about his debt, make sure you inform it to the correct person. Giving out such sensitive information to a third party is a serious breach of trust.
3.Never Alter Credit Information
See to it that you never alter your debtor’s records without informing him. You debtor would have maintained similar records like your accountant. Hence, any difference in such records can create confusion and misunderstandings.
Thus, you should always make sure that you do not alter any credit information without prior notice.
If your […]

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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.

Here are some more factors that need to be considered before hiring a debt collection agency.

1.Your Business’s Overall Turn-Over
The returns generated from your business are important deciding factors of your debt collection strategy. The higher you earn, the higher will be the amount due from your debtors. In such situations, hiring a debt collection agency can be a good option.
On the other hand, if your earnings are low, hiring a debt collection agency will not be a feasible option. In fact, it will add to your costs and in the end, you might […]

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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.
2. Poor Documentation of Accounting Information
The manual accounts payable system results into stacks and stacks of paperwork and documents. Maintenance of such documents is extremely inconvenient and troublesome. To conclude, it is a poor way of storing transaction information. It is highly risky. If you end up losing a single piece of information, it can lead you to tremendous hardships in tracking down your actual debts and receivables.
The above problem can be easily solved by adopting the cloud computing system. By adopting this system, your accounting system will get completely automated. You no longer will have to handle and maintain huge number of papers. Everything can be easily created […]

By |June 5th, 2014|Uncategorized|0 Comments|
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