3 Central Tips For CPA's And Accountants To Consider Debt Collection Agencies For Their Past Due Clients

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Accounting organizations and CPA’s offer much needed services to companies of all sizes. From small business owners, to major corporations, their knowledge cannot be underestimated, particularly during tax season.

As companies are required by federal, state and local governments to keep accurate and timely financial statements and reports, most businesses depend upon certified public accountants to prepare their reports.

However, as they help progress their clients' financial bottom line, it's normal for many accounting firms to experience cash flow problems themselves, due to delinquent and unpaid receivables from some of these same business clients. This can especially be the case during the very busy tax filing season. As such, by outsourcing to a third party collection agency, an accounting firm can quickly improve their cash flow.

Below are three significant points to consider why accountants should turn over their unpaid accounts to a debt collection agency:

Money Depreciation Over Time

As an accountant, you're keenly aware that uncollected money from services already provided decline in value the more time passes. Not only do you allocate precious time, staffing and other resources to chase after past due receivables, but it also means this is time taken away from attracting new clients.

To generate new business requires spending demonstrably more in advertising and marketing, than it does to collect from your late and non-paying customers.

Turning over delinquent, non-paying accounts to debt collection agencies is a sensible and inexpensive business decision. In addition to being in the recovery of delinquent accounts, debt collection agencies are better equipped with the professional staffing, resources, software and other equipment needed, and they can do this much cheaper than can be done in your business.

Keep in mind that activities that take you away from your principal business functions, also take you away from generating profits.

Increase Your Profit Margin Without Acquiring New Customers

As mentioned earlier, you recognize how expensive it is to acquire new customers. As marketing and advertising expenditures are required for any organization desiring to gain new customers, its also true that many companies tend to view advertising as the only means to acquire new business and grow already narrow profit margins.

Businesses should not overlook the tremendous value lying dormant in their uncollected debt. Be aware also that compared to the value of your outstanding receivables, you would have to nearly double your new business volume merely to break even.

Turning delinquent receivables over to a debt collection agency is far less expensive, and yields predictable, positive results. Monies recouped here will produce greater net profit to your accounting firm. Capital spent on marketing/advertising, while ignoring your past due receivables, is not spending intelligent capital.

Providing A Great Value-Added Benefit To Your Clients

Businesses are always looking for new ways to save money and cut their costs.. As their accountant, you can offer additional savings and help increase the cash flow to your clients’ business bottom line.

By impressing upon them the need to quickly turn over non-performing delinquent receivables after their internal efforts have proven unsuccessful, you can show them the cost savings in lost opportunity dollars, the depreciation of past due receivables over time, as well as the savings from the additional staffing, resources and time needed to continue to pursue bad debt internally.

You can also show your clients the increase in your own cash flow and operating efficiency.By showing businesses how to increase their financial bottom line and save capital, you become a trusted advisor and consultant. This will increase your overall worth to your customers, and make you stand out in a very competitive market.

Article Source: http://depositarticles.com/

David P. Montana has written widely and worked as a industry consultant in debt collection services three decades. David offers further beneficial guidelines and resources on the subject of debt collection procedures for accountants.

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