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Why
a Collection Agency Is Your Small
Business's Best Friend--Really
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by: Steve
Austin
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Does the
term "collection
agency" put you on edge? If
you're like many small business
owners, the mountain of debt you accumulated during startup might have
been enough to make you worry about collection agencies every time you
answered the phone. But your feelings toward collection agencies are
eventually going to change, if they
haven't already.
While no one wants to hire a collection agency,
it's a sad reality of doing business
that not every customer feels the need to pay, or has the ability to
pay all at once. If you want to stay in business,
you'll need to collect that money.
When your most polite and not-so-polite reminders to pay have failed,
you'll need to start getting serious,
which means going to an agency.
Small Business Collection Agency Services: More Benefits than Costs
Small business collection agency services will certainly cost more than
just writing letters demanding your money back. But the amount of money
you'll collect, not to mention the
time you'll save, will more than pay
it back. In fact, when you consider the hourly rate of your employees,
or you yourself, collection agencies
fees really can be quite a bargain.
Let's say you have an assistant your
business pays $10/hour, effectively costing your business $15/hour once
you count in employment taxes, benefits, and the overhead of your
office. You would be lucky if that assistant spent just five hours
total on each debt, and managed to collect half of them. But you would
have sunk $150 into each successful collection. Plus,
there's the opportunity cost: $150
worth of time you haven't spent in
growing your business. So the net loss is $300, and probably more if
you're a profitable business that gets
a good return on your people's time.
But if you refer your delinquent debts to a collection agency for $75
each, and they collect three-quarters of them,
you've invested only $100 per debt
collected. Once you factor in all the money from all the debts the
agency collected for you that you
couldn't have collected on your own,
the return on investment is huge.
That's not even counting the saved
opportunity cost, or all the stress
you'll save yourself and your
associates.
In the end, your small business has to focus on doing what brings in
the money: your core business. Leave your taxes to your accountant,
your office repairs to your building manager, and your collections to
your small business collection agency.
About the author:
Steve Austin is a regular contributor to Collection Agency Information
(http://www.collection-agency-information.com), a website with articles
on choosing a small business collection agency, along with reviews of
agencies, with links to their websites.
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