What are the main reasons that affect a business’s cashflow? There can be several reasons for this. However, the main reason may be the difficulties encountered in collecting unpaid invoices from clients.
Not all clients are reliable and on time. There are clients who forget to pay or delay paying their invoices. Therefore, you must chase clients for payment when this occurs.
When you have unpaid invoice from clients, do you decide whether to assign them to a collection agency or do it yourself?
An invoice is a payment bill issued by the seller to the buyer of goods or services. It details the amount of goods purchased or work completed and how much must be paid in return. It also consists of basic details about the receiver and the provider.
Unpaid invoices not collected or ignored have been a major disadvantage for businesses.
As per the experts, unpaid or late payment from clients is a barrier to the growth of businesses that leads to:
Your main task is to check whether a particular invoice was paid on the due date or has crossed its due date. To collect payments from your clients on time, you need to check with them on a regular basis.
You may ask them to pay your dues within 60 days. Some companies may take longer, but if they fail to do so, you are responsible for them. It’s clear that you won’t be able to collect Money on time, despite chasing down clients for non-paid invoices.
Once you recognize the downside of the company not paying their invoices, you can refer or consider hiring a collection agent. They will professionally handle the collection of unpaid invoices from absconded clients. A collection agency will analyse the circumstances and clear the obstacle from your path by recovering the unpaid amount. They will also advance your business cash flow through their professional experience and tactics.
In many cases, unpaid invoices are due to negligence, or a mistake made by the client. In most cases, it makes sense for businesses to remind clients to make payments.
A better way to remind your clients with the payment is to re-issue the invoices to the clients on regular basis. Another tactic that can be used is to remind them via E-mails or informing your clients through verbal communication for the payment.
Your intention is to collect the invoices politely, but you may end up communicating with them and can lead to frustration and harassment in an abrupt manner. Sometimes collection may not be as you expect.
Hence, you come to the point of whether to consider a collection agency or not
First and foremost, it is important to look for a collection agency that is certified and legally operating.
One of the important things to do, if you’re looking for an agency to hire for the collection of unpaid invoices, is to check whether they’re true to their customers. Considering an agency have a positive impact on your recovery. Things which your firm was finding it difficult to recover invoices can now be achieved through them.
Most collection agencies will charge an upfront fee for their services and in some cases will not manage to collect any unpaid invoices on their client’s behalf due many reasons such as an absconded debtor or the debtor has closed their business. This would mean that you could potentially lose out more on fees and not having your outstanding invoices collected.
We would advise to find a collection agency that operates on a “No Collection, No Fee” basis. Which simply means that you only pay a percentage on what money has been collected. The percentage can also be subject to negotiations depending on the number of invoices due to collect.
Recovery of invoices will depend on how old the invoice is, and what tactics the collection agent will use to determine recovery of the entire amount.
Hiring a collection agency is a huge step that a business owner can take to protect themselves from a huge loss. It will not only impact your profits but will also relieve you of the burden of recovering. Additionally, it is important to know that, once you hire a collection agency, a basic fee will be charged, which is why we recommend finding one that operates a “No Collection, No Fee”.
In the event you want to recover your unpaid invoices and are tired of trying to recover the money from clients, hiring a collection agency is worth the time and effort they put forth to recover your money.