Using First Party Collection Agencies To Improve Cash FlowBusinesses large and small rely on positive cashflow to survive. Positive cashflow can only be achieved if debts owed to the business are collected in full and on time. Prompt action needs to be taken to enforce agreed payment terms and this is where first party collection agencies can help the resource strapped business manager. Managing a business is challenging in today's cut-throat environment but trying to locate new business whilst chasing up payments from past customers makes the task of running a business doubly difficult. Whilst large companies may well have a large, dedicated finance department that can focus its attention on corporate debt collection, many small and medium sized enterprises simply do not have the same resources.
Any competent manager will understand the need to contact customers as soon as a payment becomes due but many do not have the resources to make the regular debt chasing calls that are often required to obtain settlement of the account. Business debt collection is time consuming and costly and many consider that the whole process is better outsourced. However, many businesses prefer not to intimidate their clients by sending in a corporate debt collection agency in the initial stages of the business debt collection process, so companies such as West Asset Management offer a first party collections service that provide the credit control and debt collection functions as if they were an employee of the supplier company. A first party collection agency will operate under their client's name to initiate the debt collection process. If funds are not forthcoming from the debtor the corporate debt collection process will be escalated - usually by the same collections agency but then operating under their own name and identity. Bad debts proliferate like weeds in a poorly tended garden. Once a company gets a reputation for not having efficient credit control mechanisms in place they will drop to the bottom of everyone's list for payment. It seems that this has become the way of the corporate world. By utilising the services of a first party collection agency, companies of all sizes can have the efficiency of their very own credit control department, at a fraction of the cost of directly employing specialist staff. Even larger companies who may already have specialist collections staff will benefit from additional assistance. With the increase in bad debts experienced by businesses in every sector of the market place, the workload on collections staff has increased to unmanageable proportions - extra help will be welcomed. What amounts to effectively outsourcing the collections function of a business can produce cost savings as well as reducing the number of days it takes to actually receive the money due. Because the collections process will be fully automated in a specialist first party collection agency it becomes cost effective to collect even the smallest of outstanding debts. This has the double advantage of not only improving cashflow but also in sending out a message to customers and potential customers that you mean business as far as debt collection is concerned. |