Opportunity In Bad Debt Recovery
Q: I am starting my own business in the IT & Comms sector, the profile of the business in terms of number of custmers is high with a large ammount of invoices I am trying to decide whether to set up invoicing & debt recovery myself or to outscource to another company specialising in this area. Who are they Are any on net What is the likley ammount they will charge as a percentage of each invoice ?
A: Debt recovery costs are always high whether undertaken by yourself or one of the specialist companies. Undertaken by yourself you will find it time consuming (time that you might be able to use more profitably) and frustrating. The specialist companies have the advantage of being an outside voice and frightening to some debtors who wish to protect their image but to more persistent debtors, especially for small amounts, they are no more effective than chasing the debt yourself. I don't know enough about your business/industry to be able to give any specific advice but you might try talking to other people within your trade for their experience. What I can say with certainty is that the best way of avoiding bad debt is not to make the sale in the first place. This might sound glib but you should look very hard at how you offer credit and whether you need to. If it is specific types of customers who are causing problems then you must make the commercial decision as to whether their business is sufficiently profitable to stand the extended credit and bad debt. .
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