Don’t wait until your business is in crisis-Why your growing business needs a collection strategy

How can you avoid a financial crisis in your business or medical practice?

The short answer is to build a strategy and plan ahead for potential cash flow challenges. Not reacting to a problem that has built up over time.

And what if your business is growing? Proper systems help prevent future cash flow challenges in a growing organization.

Your organization may be in a situation right now where cash flow is beginning to tighten. Maybe those customers who were once reliable stop paying on time. And your receivables continue to age. And suddenly, you the business owner find yourself looking for help to help collect some of that money.

A growing business creates opportunity but also risk. And that’s why understanding how a collection agency can solve short term problems and mitigate future risk is mission critical.

Understand why you’re looking for help from a collection agency

Many businesses and even medical practices begin searching for a collection agency after realizing they have waited far too long to handle delinquent accounts.

Ask yourself and your team why you’re considering a collection agency.

• Are customers or patients consistently paying later than your established payment terms?
• Is your staff spending way too much time chasing down payments?
• Are unpaid invoices negatively impacting cash flow?
• Are employees uncomfortable asking for money?
• Or, has your business outgrown your current accounts receivable process?

If you understand the underlying issues, this can help determine whether you need occasional assistance with debt collection or a long-term partner to support your growing business.

Start thinking beyond today’s overdue accounts

There is a common misconception out there that collection agencies only deal with old debt for your business.

But the truth is, most collection agencies help a business prepare for future growth. When we start the process with potential clients, we ask about a business’s growth plans.

When you’ve decided to use a collection agency, be prepared to discuss the following.

• Where do you expect your business to be in two to five years?
• Are you expanding into new markets or verticals?
• Do you plan on extending credit to more customers?
• Do you expect larger invoices that may come with increased service or product offerings?
• How fast is your business growing?

Growth increases financial risk for your business or medical practice

As your customer base and revenue grow, so does exposure to risk.

Congratulations, you’re adding new customers, increasing sales and expanding your market!

However, what many business owners and operators do not anticipate is that each new customer can represent another opportunity for a delayed payments, or no payments at all.

We are not trying to be negative, it’s just part of growing a business.

Your growing business also means.

• More invoices and statements to manage.
• More customers who bring different payment habits to your business.
• Larger balances possibly at risk.
• Increased administrative workload on your current resources.
• More pressure on the much-needed cash flow.

Without a scalable debt collection strategy, overdue accounts will grow just as fast as your revenue.

Evaluating your current credit terms and policies

If your company is growing, it is absolutely mission-critical to evaluate how you are extending credit to customers or patients. Before sending accounts to your debt collection agency, look at your internal processes for credit.

Consider these questions.

• Are customers or patients completing credit applications?
• Are payment terms clearly communicated?
• Is your team sending out invoices on time?
• How do you send out payment reminders and are they consistent?
• Do you have a defined timeline and process for working overdue accounts?

When you work with a reputable debt collection agency, these professionals can often identify weaknesses in your processes that are contributing to payment delays.

For many business owners and those responsible for financial operations, hiring a collection agency has been a reaction to a more serious issue.

Look for a collection agency that can grow with your business

If your business or medical practice is growing, or you have plans for expansion, you need to work with a collection agency that is equipped to support that growth.

Some smaller regional collection agencies may not be able to support your growth plans so choose carefully.

Ask your collection agency representative some of these questions.

• Can you manage increasing account volume?
• Do you have an online portal that allows clients to submit and monitor accounts?
• Do you provide accurate reporting on collection accounts?
• Do you have dedicated customer service representatives?
• Can you handle nationwide collection accounts?

The right collection agency will become an extension of your accounts receivable department and not a last resort. Especially if your organization is experiencing growth.

Protecting existing and future customer relationships

If your business is growing that means you’re working hard to build a larger customer base and possibly enter new markets. That means you do not want to lose any momentum by damaging customer relationships.

Reputable collection agencies understand this concern as well as knowing they play a vital role in maintaining customer relationships.

They also understand that in order for you to grow, they must treat your customers with dignity, respect and professionalism.

View debt collections as part of your risk management strategy

Remember, insurance protects your property and people. Cybersecurity protects your data.

A collection strategy protects your cash flow and future growth.

Preparing for growth and building systems that reduce financial risk are must-haves before it becomes a crisis.

Whether your company is struggling with overdue accounts today or preparing for rapid growth tomorrow, establishing a relationship with a reputable collection agency helps you mitigate future risks.