Cash is King, Part 3: Five advantages of debt collection on a contract basis
The case occurs that no company would wish for: A customer does not pay the invoice even after one or two reminders. What should the company do then?
An SME performs its service, issues the invoice - and waits. After 30 days, it issues a reminder - and waits. Nothing happens. What is the best thing for companies to do in such situations? "Those who send unsuccessful reminders can have their receivables professionally processed by a debt collection company," says Jason Glanzmann, Director Serviced Portfolios at Intrum Justitia.
The way from the creditor to the debt collection company
And this is how debt collection works, when the receivables are handed over to a collection company: The relevant SME - the creditor - can have the claim existing against another company - the debtor - processed by a third party. "The company can concentrate on its core competence again thanks to the handover to an expert," says Jason Glanzmann. Intrum Justitia offers two products for such cases: AGB75 and AGB90. If you opt for these, you hand over the receivables to the collection company after two reminders and within 75 or 90 days of invoicing.
Five advantages of debt collection on a contract basis
- Contractual fees: Customers are informed of the costs that will be incurred if payment is not made on time. It is recommended to transparently show the cost consequences in the second reminder.
- Fee-free collection: if the receivables are handed over before the 75th or 90th day after the invoice date.
- No or low debt collection and address research costs.
- Higher recovery rate thanks to consistent escalation and more satisfied customers thanks to transparent communication.
- Since the originating consumer pays the costs, you can optimize your costs. For example, the personnel expenses.
Why should companies seek assistance from a debt collection company?
That's why:
- Consistent two-step escalation prior to collection is not possible on your own behalf.
- An expert in receivables management knows what steps need to be taken next. The companies are thus relieved administratively.
- They can concentrate on their core competencies and devote themselves to their actual tasks. Otherwise, companies spend a lot of time and energy on receivables management - and often they don't manage to collect the money on their own.
How to reach an amicable agreement
What should be considered when the two sides come to an amicable agreement? What individual payment targets and payment periods should be agreed? Intrum Justitia addresses this issue in the fourth part of the continuation story an.
Contact for more information:
Intrum Justitia AG, sales.ch@intrum.ch, +41 44 806 85 57
