In our previous two articles we discussed the importance of communication in pursuing collections, as well as when you should hire a collections attorney. In this article we’ll briefly discuss why it’s critical to stay on top of your accounts and be diligently proactive when customers are past due in their payments.
The task of performing collections is certainly an unenviable one. However, it’s a necessary function of business, and putting off collections until invoices are 60 or 90 days past due can cost you dearly. Studies have shown that the likelihood of successfully collecting on your receivables drops drastically the longer the receivables are allowed to go past due. After 30 days the likelihood of collecting goes down to 90 percent. After 90 days the likelihood drops to 74 percent. Put another way, when an account becomes 90 days overdue your business is only likely to receive 73 cents for every dollar owed. After six months, the amount drops to 50 cents for every dollar. After one year, it plummets to a mere 25 cents for every dollar.
If you have a customer who is past due you need to remember that you have a tremendous impact on how soon you receive the money owed to you. This is why in so many of our articles (including the two most recent ones) we strongly reinforce the necessity of being diligent and proactive. Remember, you’re in business to make money, not finance your customers (which is essentially what you’re doing when you fail to be proactive in collections). If you put off collecting on your invoices until they’re 60 or 90 days past due just because it’s such an unenviable chore, then you can only look to yourself when you begin noticing your cash flow slumping.
The Jayaram Law Group routinely and successfully assists its clients in their business-to-business (b2b) collection needs. We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.
If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting www.jayaramlaw.com.