When considering the recovery of your receivables, the biggest factor is time. The time that is spent by your team collecting past-due accounts or the time waiting through a consumer proposal process is realized in terms of opportunity cost – in other words, precious corporate resources you could have re-invested somewhere else.
The cost of collecting
Past-due receivables are a cost of doing business. Implementing a receivable recovery plan involves personnel, management, overhead and the ability to manage the fluctuations in recovery and the impact it has on your cash flow. The investment tied up in the collections process is money that could be deployed elsewhere.
The timeline of recovery
Recovering receivables has an uncertain timeline. There are the habitual late payers you can count on to pay with a reminder. After that, it becomes harder to predict when people will pay. If your customer is in arrears on many payments, a consumer proposal may be started to get you a percentage of your receivables. While better than writing off your debt, it could take up to 5 years before you have those resources to invest. That means 5 years of ongoing management of fund recovery expenses.
Time is money
During the time you are waiting to get money out of these receivables, you are not only spending on recovery, you are missing the opportunity to invest that money now. Having capital start generating returns immediately earns more than investing the same money in 5 years.
Selling your debt
The time spent collecting or waiting for receivables costs you opportunities to grow your business. Another approach is to evaluate the option to sell your debt. In exchange for your debt, a receivables management company provides immediate cash up-front that can be put back into the business for quick and effective deployment.
Managing your receivables is an important part of business, just like other assets. Receivables should be managed properly, and it can sometimes be a difficult task to manage internally.
Outsourcing your debt recovery can offer some smart and timely alternatives. Canaccede Financial Group is the largest multi-asset acquirer in Canada. we provide both debt servicing and purchasing solutions. Our expert valuation team can work with you to size the debt recovery potential for your organization. If you, or someone on your team, would like to find out more, please contact us at email@example.com .
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