An insider’s look at managing negative cash flow

Many small businesses with negative cash flow, as well as larger organizations, are making the same costly mistakes.

Handling everything with internal resources.

Leaders, owners and founders tell themselves the same thing over and over again.” If we just keep calling, emailing and sending statements, eventually these customers will pay.”

The problem with that thinking is that it is a false belief, and over time, it proves to be unsuccessful.

Why handling debt collections in-house ultimately fails

While your business may be able to collect some overdue invoices from current customers, overall, handling collection activity internally has many downsides.

You will ultimately waste valuable time and resources of your team. As opposed to a professional debt collection agency that has systems and processes from maximizing collection activity.

Handling debt collections internally can also strain customer relationships. If your team doesn’t know how to communicate effectively with a customer or patient that has gone delinquent, that conversation can turn adversarial quickly.

Now let’s say you’re running a lawn care company or managing a veterinarian practice. It probably goes without saying that your staff members have not been trained in how to conduct a collection call, subtle negotiation tactics or even compliance with the laws.

And in most cases, internal debt collection calls to customers or patients will ultimately lose leverage over time and become ineffective.

The tempting shortcuts many businesses take with unpaid invoices

When internal efforts fail a small business or larger organization, many businesses end up making some critical second mistakes when trying to collect on overdue invoices.

Many take an easy way out and start discounting the amount owed just to get money in the door. And many businesses we’ve spoken to over the years just write the debt off and stop trying to collect it entirely. This can be appealing to many because it removes the emotional part of confronting a customer that has not paid. That money is yours and your business earned it so think twice about doing this.

Why does this backfire?

Discounting or writing off the debt entirely will reinforce that accepted behavior in the future. It sends a signal to customers that they can wait you out until you give up.

Discounting overdue invoices or writing them off also doesn’t fix a systemic issue. If you have a pattern of avoiding the real issues with cash flow, you may just decide to expect certain losses. And that should be unacceptable to you.

Taking the correct and proven path to positive cash flow

You can try to fix that leaking faucet in your house and you can spend hours doing so. But if you don’t have the right training and tools, you may never correct your problem

The same holds true for getting late and non-paying customers to the table. At some point, you need the expertise of a reputable debt collection agency. So if your internal efforts have failed, what’s left?

It’s time to bring in a third-party collection agency that understands your business.

While many businesses hesitate to take this important step, it’s a critical one that proves to be financially beneficial as well as providing Peace of Mind.

There’s a simple explanation why this works for your business.

You have access to trained professionals that follow proven systems That paves the way to get your customers current.

Using a third-party debt collection agency protects your business because they will maintain compliance, especially if your customers are in multiple locations.

You and your team will regain untold amounts of time and resources that were once put towards getting your customers to pay. That can be put towards growing your business and meeting other goals.

Urgency happens when a third-party collection agency calls your customers. And urgency equals getting paid faster in many cases. Your business may have deemed some accounts uncollectable but when that agency steps in, that can make an impact.

Bottom line?

You get paid.

Your team focuses on the right things.

You preserve those hard-earned relationships you’ve built with your customers.