Most small business owners understand the importance of prioritizing their debt collection practices, but those practices also tend to fall into the “important, but not urgent” category. And those tasks often get overlooked in favor of the more pressing demands of tasks in the “urgent, but not important” categories.
Business owners are constantly forced to be putting out fires, and debt collection is one of those things that is always easy to put off to another day or time. However, making those collection efforts a bigger priority in your office can have a dramatic impact on your bottom line in the long run.
In order to help you understand just how important debt collection can be, we put together a list of five reasons that you should be making it a higher priority in your business.
1. It’s Money You’ve Already Earned
In almost every case, outstanding debt you are holding for customers or clients is associated with business that you have already completed. You have already held up your part of the bargain, and you deserve to be compensated for it.
2. Outstanding Debt Creates Bad Customers
It is always more expensive to acquire a new customer than it is to keep an existing one happy. But customers that have let their accounts run into delinquent status are no longer the type of people you want to be doing business with.
By working your debt collection strategy in a way that helps prevent bad accounts from getting worse, you will save the potential for future transactions with those customers.
3. The Art of Procrastination
Any college student will gladly tell you that the more you put off a particular task or project, the easier it will be to continue putting it off even further. The same is true for debt collection practices.
Every time you let your debt collection tasks slide to the next day, week, or month agenda, you are making it that much easier to put it off again the next time it pops up on your to-do list. Take a stand against this procrastination and get your debt collection going.
4. Acting Fast Improves Your Odds
In addition to helping you avoid procrastination, acting fast on your outstanding accounts will help you to improve the odds that you actually recover the amount that is owed to you.
Time is a critical factor in debt collection, and quick responses to troubled accounts will always be the most effective way to increase your chance at salvaging the relationship.
5. Every Day Matters
Just as acting fast will improve your debt collection results, failing to act in a timely manner will have the exact opposite impact on your business. Collection statistics show that every day that passes for a delinquent account reduces the chances of that account every recovering.
Because most business owners put their debt collection tasks into the “important, but not urgent” basket, it can be easy to let them slip through the cracks from time to time. Using these five reasons to get those tasks into the “important, and very urgent” basket will make a tremendous difference to your bottom line.