Shout It Loud

There’s one account recovery mistake that costs more businesses more money than any other… and odds are you’re making this ruinous mistake too! And if that’s the case, by getting this out of your business and ridding yourself of this simple mistake, you’ll open your account recovery flood-gates.

So what is this costly mistake?

Quite simply: hanging on to your debts too long.

What few people know is the well established relationship that exists between the length of time and account goes unpaid and how much of that account you actually recover.

For instance, if you were to recover an account 90 days after it was due for every dollar outstanding you can reasonably expect to recover 81 cents.

To illustrate, if you’ve got a $1,000 debt and you were to recover that account at 90 days then you could reasonably expect to recover only $810.

Boiling this down, by giving your debtors 90 days (i.e. three months) to settle their accounts you’re in effect throwing away almost 20% of your gross revenues.

Similarly if you have an account outstanding at six months you can expect to recover only 65 cents in every dollar owed to you. In effect you’ve flushed away 35% of that revenue.

And if it takes you 9 months to recover an account you’ll effectively kiss half of it good-bye.

Now from all of this there are two critical concepts you need to burn in to your memory.

Firstly, the longer you wait the less you’ll actually recover.

Secondly, and more importantly by reducing the time you allow your customers to finalize their accounts you from 90 days to 30 days you’ll effectively boost your recovered income by a whopping 20 to 25 percent! And that’s without any added effort, expense, or output.

Hopefully you can now see the huge source of untapped profit hidden inside your business. And all you have to do to unleash these profits is reduce the amount of time you give your debtors to pay.

So why then does the value of an un-recovered account shrink the longer you let it slide?

To get an appreciation for what’s really going you need to be mindful that for each person on your debts ledger there’s a tonne of other creditors also chasing them for money. Now owing multiple people lots of money money your debtor’s get by initially by stringing everyone along. It’s not until someone actually threatens serious action that they make a genuine effort to settle a debt.

Now as time passes not only do more and more creditors press hard for their money but what little means the debtor may have had to pay have nowevaporated.

The upshot of all this is if you insist on recovering your accounts on your own while other creditors bring in Professional Debt Collectors well naturally you’ll be at the bottom of the heap when it comes to your debtor deciding who they’re going to pay first. In a classic case of the squeaky wheel gets the grease because your debtor knows they can keep putting you off it should come as no surprise that they pay their other creditors who are pressing harder before they pay you.

So by the time you eventually start applying serious heat on them the cupboard is bare.

Now they say desperate times call for desperate measures. So when your debtor eventually runs out of cash to pay you that’s when they become unpredictably dangerous.

Backed in to a corner they’ll either go in to hiding or they’ll come out fighting. And this fighting usually takes the form of them Falsely Disputing The Debt in the knowledge that pretty much every debt collection agency won’t pursue a disputed {account|debt}.

All of which leaves you dangling at the end of a rope with practically no one to help you.

So as you can now appreciate, this explains why Debt Collection Agencies have so much trouble recovering old debts. And while it’s easy to blame the debt collector for failing to recover an old debt, the harsh reality is that it’s you who’s set both yourself and the debt collection agency up for failure.

So stop setting yourself up for failure. Give your debtors no more than 30 days to settle their accounts and your profits will instantly skyrocket by 20%!