CPA's and accounting organizations offer very key and valuable services to all size organizations. Small business owners, as well as major companies and corporations, depend on their skill and expertise. This is very true during tax season.
Nevertheless, while helping their business customers be more profitable, it's very common for CPA's to face cash flow troubles of their own, with past due accounts from some of their delinquent business customers. This is particularly true during the very frantic and busy tax season. As such, by outsourcing to a third party collection agency, an accounting firm can quickly advance their cash flow.
Below are three key points to consider why accountants should turn over their unpaid accounts to a debt collection agency:
The Depreciation Of Capital 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.
Outsourcing these delinquent accounts to debt collection agencies is a smart and inexpensive business decision. Not only are they experts in the recovery of past due capital, collection agencies have the resources, equipment, staffing, and they can do it on an economy of scale that simply can't be done internally in your business.
Any time spent on activities outside of your primary competencies, is income-robbing for you.
Grow Your Profit Margin Without Acquiring New Customers
As previously stated, you know how costly it is to attract new customers. Its common knowledge that spending for advertising and marketing is necessary for organizations to acquire new customers. Nevertheless, many companies tend to see advertising as the only means to gain new customers and grow already narrow profit margins.
Often overlooked is the tremendous value lying dormant in your uncollected past due debt. It should also be mentioned that when taking in account your past due debt, you'd have to almost double your new business volume just 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. Capital spent on marketing/advertising, while ignoring your past due receivables, is not spending intelligent money.
A Great Value-Added Service For Your Business Clients
Businesses are always looking for ways to cut costs and save money. 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 accounts 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 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.