It will come as no shock that the main objective of any business is to make more money than it loses. Staying in the black is essential for the longevity of business but there are times when debt can be the best option. Businesses using debt as a means to acquire additional assets is nothing new yet recent data revealed that 52% of UK businesses are now being crippled by toxic debts.
A Business having debts of its own can sometimes be inevitable but this can often be caused by a Business not actively chasing its own debtors. It is very often difficult enough for Small Businesses to perform debt collection and is often very taxing on time and resources. Unpaid Invoices can literally destroy a Small Business overnight but how about large corporations and bigger UK Businesses. This is particularly taxing for businesses just starting out and can also impact large corporations.
An efficient Business Debt Recovery service can help make or break a company. The problem is, quite often credit control teams are handcuffed by over exuberant finance managers. They may see a third party debt collection agency as a threat to their position or their ego’s may come into play. Time and time again, Professional and accredited Business Debt Collection Agencies have recovered millions for corporates and PLC’s alike yet some ‘experts’ remain unconvinced of their effectiveness.
It is true to say that not all Debt Collection Agencies are the same and not all Business Debt Recovery services will have the same impact. Due diligence is essential for any Business looking for a reputable Debt Collection Agency that delivers results.
Why Business Debt Collection Matters
For a Business aiming to make money, this is much harder to do when a percentage of customers are not paying on time or even not paying at all. This can quickly become a one-way street and have a snow ball effect. As weeks or months go by, more and more bad accounts are acquired creating a huge dent in profits. While it might be a nice idea to provide goods or services for free, it’s not sustainable for any business to do so.
The staggering levels of debt corporates and big businesses are working with can reach the billions. An example of this is highlighted by Volkswagen’s €217.3 billion debt. Whilst a large percentage of that debt is loans in repayment but still a significant proportion is unrecovered debts. With such a vast ledger to maintain, if the delinquency and default rate starts to rise, it could cost the Volkswagen group billions if they are not proactive in stemming the tide. That is why it is imperative Volkswagen works with a efficient and Professional Business Debt Recovery service.
The Positive impact of Business Debt Recovery
Large corporations can boast profits of Billions of pounds every year. The massive profits they generate often lead to contributions to society. Their success can even be critical for local or even national economies. This can see them getting special treatment such as tax relief due to their ability to stimulate and drive local economies forwards. Their earnings are on such a scale that small loss levels can be factored into their yearly projections. However, while big businesses can afford to lose money in the face of unprecedented events such as the pandemic, it is not sustainable. Companies running at a loss typically do so where there is reason to speculate to accumulate however, there comes a time when profits take priority.
Losing money unnecessarily is not positive for any size of business. Those businesses that do lose money due to unpaid debts are often the ones who then fight the hardest to recover it and use the best available resources. Small Businesses often do not get paid and are the first to take swift action.
What do large Businesses do to Recover Business Debts
Business Debt Collection is something most Businesses would rather do without but it is necessary to ensure sustainability. SME’s and large Businesses alike should only consider using professional means to recover debt.
Naturally, the first step to getting paid for goods or services is to invoice a client as normal. At this point, the paper trail begins that shows the customer to be accountable.
If the payment remains outstanding beyond the stipulated payment terms, businesses should then pragmatically chase customers via emails and phone calls. Many Businesses implement a credit hold policy whereby they stop doing any further work for a customer till their debt is paid in full. The ‘credit hold’ policy is pretty common as far as things go because customers then realise they need the service they have failed to pay on time. However, if they still do not pay, it’s important to issue a final reminder notice regarding the outstanding debt. It is commonly the last direct communication between two businesses before the debt enters over into a Business Debt Collection scenario.
A final notice should offer one last deadline for payment and advise that if the deadline is not met, then Debt Collection action will be necessary, adding additional costs to the debt.
Recovering Business debts is critical
Recovering debts for big businesses is critical, not just for their own operations but also because their competition. With large companies like Apple, Amazon and Ford buying up corporate debt, competition at the top of the food chain is becoming more fierce. Top corporations have amassed huge portfolios of cash and investments worth over $1 trillion, turning themselves into investment managers.
Not only do the largest corporations have their products and services to contend with, but they must also branch out and diversify. Companies like Apple have ventured into financial markets with investments like corporate and securitised debt.
Their levels of cash allow them to establish multi-billion dollar lending operations, while others outsource it to already established portfolio managers. That is now the benchmark for large corporations to follow to ensure they can use their swathes of cash wisely.
Choosing the best Debt Collection Agency work with
UK Debt Collection Agencies come in different shapes and sizes with different areas of specialism. It is always advisable to do your homework and Trustpilot offers a great insight into a Debt Collection Agencies reputation.
A Business should seek out a Professional Company with accreditations and a a proven track record of delivering a quality service over a long period of time. Businesses need to avoid overly aggressive debt collection companies as it could tarnish their reputation.
Business Debt Collection is more important than ever after the economical struggles caused by the pandemic. If a Business chooses wisely then it could be one of the most crucial and beneficial decisions they ever make in terms of protecting profits.
As well as the UK, Debt Collection in France to the Falkland Islands is possible via overseas debt recovery specialists.