Practical Business Coaching

By David Montana

 Accounting firms and CPAs offer much needed services to organizations of all sizes. From small business owners, to major corporations, their knowledge cannot be underestimated, very during tax season.

Since organizations are required by federal, state and local governments to keep accurate and timely financial statements and reports, most organizations depend on accounting organizations to prepare these documents.

However, as they help increase their clients’ financial bottom line, it’s normal for many accounting organizations to experience cash flow problems themselves, due to delinquent and unpaid receivables from some of these same business customers. This is especially so during the very busy tax season. That being the case, CPA’s can greatly advance 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:

The Depreciating Value Of Capital Over Time

As an accountant, youre acutely aware that money earned from services provided today drop in value with time if those monies go uncollected. In addition to spending valuable time, resources and additional staff going after unpaid accounts, it also means this important time is taken away from acquiring new business.

To acquire new business necessitates spending exponentially more in marketing and advertising, than it does to collect your past due receivables.

In addition to being knowledgable in the recovery of delinquent accounts, debt collection agencies are better equipped with the professional staffing, resources, software and other equipment necessary, and they can do this much cheaper than can be done in your business.

Generating profits is your main competency. Activities that take you away from those principal functions, also take away the focus from generating income.

Increase Your Profit Margin Without Acquiring New Customers

As previously mentioned, you’re aware how expensive it is to acquire 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.

Turning delinquent accounts 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. Money spent on marketing/advertising, while ignoring your past due receivables, is not spending smart capital.

A Great Value-Added Service For Your Business Clients

Businesses are always seeking ways to trim costs and save capital.. As their CPA, you can show additional ways to save, advance cash flow and improve your customers’ financial bottom line.

Teaching them the importance of turning over delinquent accounts quickly when internal collection efforts prove unsuccessful, you make them see the cost savings in lost opportunity dollars, the depreciation of unpaid debt over time, not to mention the savings from reduced internal staffing and resources.

You can also show your customers the increase in your own cash flow and operating efficiency.Showing your business customers how to further save capital and increase their business bottom line will put you in even better standing with them. It also makes you stand out from others in a very competitive market who similar accounting services.

David P. Montana has published extensively and worked as a business specialist in collection agency services three decades. David offers further helpful tools and resources on the subject of debt collection procedures for accountants.

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