Why NOT using a collection agency is costing your small business more than just money

For many people who own or operate a small business, hiring a collection agency feels like a last resort. It’s something your small business only decides after exhausting every other option.

However, in reality, not using a collection agency can slowly and quietly erode your business in ways that are far more damaging than you might realize.

As you know, unpaid invoices are not just frustrating you and your team. They are a massive threat to your cash flow, the sustainability of your business, your ability to grow and ultimately the people you employ.

Here are some important reasons why avoiding using a collection agency for your small business can ultimately cost you far more than you think.

Cash flow will suffer without using a small business collection agency

Cash flow is the lifeblood of your small business. And when customers are not paying you on time, or at all, it creates a huge ripple effect through your small business.

• Bills and expenses get harder to pay for your business.
• Increasingly, payroll becomes a stressful situation.
• Growth and improvement opportunities get delayed or put off.
• Your employees may sense challenges and may seek other employment opportunities.
• Equipment and other necessary items fall into disrepair.

Many small business owners and operators underestimate how much those outstanding invoices are silently squeezing their operations. A collection agency specializing in small business can accelerate payments and turn unpaid invoices into positive cash flow.

And they can do it faster and more effectively than your internal efforts.

Spending time and resources on the wrong type of work and tasks

You did not start your lawn care business, your dental practice, or your veterinarian clinic to spend hours chasing down payments.

Spending this time trying to get people to pay is not only time-consuming, but it becomes mentally draining at some point. You get tired, angry and eventually resentful of the customers that aren’t paying you.

Every hour you and your team spend sending follow-ups, making calls and leaving messages and trying to track down payments is time you are not spending on generating revenue for your business.

Running a small business already requires you to wear far too many hats.

Because debt collections is a specialized area that requires a certain skill set and time, outsourcing allows you to reset and refocus on what actually can grow your small business.

Your small business should be taken seriously

When your customers feel there might not be any real consequences for not paying you, it can unintentionally send them a signal that your payment terms are flexible, or even optional.

This is unacceptable, and you should be paid on time for what you provided to that customer.

When your small business does not reinforce payment terms, this leads to more late payments, disputes, longer payment cycles and your customers may prioritize other bills over yours.

Because they think it’s acceptable.

When you use a reputable collection agency specializing in small business, it will send a clear message that you take your business seriously and you expect to be paid according to your terms.

Debt collections with internal efforts have limitations

We always recommend using internal resources to issue statements and conduct follow-up calls for customers and patients who have not paid a bill. The time spent on that is certainly worth it because your invoice could be an oversight.

However, after polite reminders and those basic follow-up calls become ineffective, it makes sense to outsource those difficult receivables to a reliable agency.

A collection agency that specializes in your small business brings proven systems, strategies to mediate the unpaid bill, consistency that your internal team may not be able to maintain and they bring compliance to protect you legally.

At some point, certain customers are not going to pay and your internal procedures will yield minimal results.

Unnecessary stress in your small business

Those unpaid invoices are not just affecting your bank account and your cash flow. They take up space in your head. And they ultimately affect the mood and the culture of your small business.

Financial stress in a small business can do tremendous damage from the top down.

It also has business owners and operators questioning themselves.

Should I follow up with this customer again?

Am I being too aggressive with my patience?

Should I even keep this client?

And a ton of other questions and doubts.

The ongoing stress adds up. And if your small business is already overextended, you can’t afford not to use a collection agency that specializes in small businesses. It removes the burden of consistent procedures for getting paid and it can provide you Peace of Mind.

You may be leaving money on the table

Not all late invoices are unrecoverable. That’s simply not true.

If you’re tired of following up with customers and patients that don’t pay, this process may be exhausting you and many small business owners and operators simply give up.

The right agency offers you the opportunity to recover funds that many other businesses may have written off.

It’s an impactful decision that can make a huge difference on the bottom line of your small business.