3 Reasons Why Accountants And CPA's Ought To Outsource Their Late-Paying Receivables To A Debt Collection Agency

By: David Montana

Accounting firms and CPA's afford highly valuable services for businesses of all sizes. From small organizations, to larger, major corporations, their know-how and skills cannot be underestimated. This is especially true during tax season.

As federal, state and local governments require businesses to maintain accurate and timely financial reports and statements, most organizations depend on accountants to organize these reports.

However, as they help improve their customers' financial bottom line, it's typical for many accounting firms to experience cash flow problems themselves, due to delinquent and unpaid accounts from some of these same business customers. This can especially be the case during the very busy tax filing season. That being the case, CPA's can greatly increase their cash flow by hiring outside collection agencies.

Listed below are three vital reasons why accounting firms need to turn over their non-paying accounts to debt collection agencies:

Money Depreciation Over Time

As a CPA, you're very aware that past due, uncollected money from services already rendered decline in value as more time passes. In addition to spending valuable time, resources and additional staff going after unpaid accounts, it also means this key time is taken away from acquiring new business.

Outsourcing non-paying accounts to a debt collection agency is an economical and intelligent business decision.

Any time spent on activities outside of your core competencies, is income-robbing for you.

Improve Your Profit Margin Without Getting New Customers

As previously stated, you know how costly it is to attract new customers. While advertising and marketing expenses are necessary for any business wanting to attract new clientele, more often than not, getting new business can seem like the only way to cover and/or 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.

Outsourcing to a debt collection agency is much less expensive, and produces more predictable positive results. The capital recouped here can yield greater net profit to your accounting business. Capital spent on advertising, while neglecting your past due debt, is not spending capital smartly.

Adding Value For Your Business Client

Businesses are always seeking ways to trim costs and save capital.. As their accountant, you have the ability to educate your customers and show them additional ways to save, increase cash flow, thereby improving their financial 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.

This is especially the case if you are also experiencing improvements in your own firm's cash flow and operating efficiency.By showing businesses how to improve their financial bottom line and save money, you become a trusted advisor and consultant. This will increase your overall worth to your clients, and make you stand out in a very competitive market.

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David P. Montana has written extensively and worked as a business expert in collection agency services for thirty years. David provides supplementary beneficial tools and resources on the subject of debt collection procedures for accountants.

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