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If you’re like most people chasing unpaid accounts is a time wasting pain in the neck you’d rather not deal with. It ranks up their with filing tax returns and firing staff.
In light of its infuriating nature, it’s tempting to put-off recovery of your overdue accounts. But the hassle of chasing bad debtors s nothing next to the seven hidden ways your overdue accounts are suffocating your business.
7 Crippling Costs Of Overdue Accounts
Crippling Cost #1: Cost Of Communications
The first expense of pursuing unpaid accounts is the actual cost of communicating with your debtors. The paper. The printing. The stamps. The phone calls. While individually small, these hard costs collectively burn thousands off your bottom line.
Crippling Cost #2: Employee Costs
On average businesses spend 9.5 hours every week managing their overdue accounts. Even paying a staff member a basic hourly wage of $12, that ads up to $5,928 ever year! That might not sound so much but wouldn’t you rather have an extra six grand in your pocket than waste it chasing debtors?
Crippling Cost #3: Lost Opportunity
While it’s fairly straight forward to work out the money lost paying employees to chase bad debts, what’s not so obvious is the opportunity cost. Imagine the impact on your cash-flows if that employee instead invested nine and a half hours a week following up customers on the phone; cross-selling them other products or services; stimulating referrals. By committing employee time to debt recovery you’re actually missing out on potentially tens if not hundreds of thousands of dollars.
Crippling Cost #4: Diminished Personal Effectiveness
Similarly, every second you spend dealing with overdue accounts personally is a second you’re not producing. Now as the business owner your time is worth substantially more than a tiny $12 per hour. So by wasting hours of your precious time chasing debts, not only is your hourly rate significantly higher than that of your employees, you’re also taking time away from your highest money-producing tasks.
Bottom Line: Even though this cost is virtually incalculable… understand that it’s massive!
Crippling Cost #5: Emotional Cost
If you’re like most people dealing with the lies and abuse that go with chasing bad debts takes its toll. And at the risk of sounding a bit out-there all that negative energy, all that anger and frustration… your accounts manager takes it all on board, darkening their mood and in turn infecting your entire business.
Now before you dismiss this, just imagine you’re the target of verbal abused right now. If you’re like most people you can’t help but feel somewhat angry and violated. And you’ll harbor those emotions for days. Festering in this state your performance, your decision making and your relationships (both at work and at home) will all suffer.
So if that’s how just one abusive incident can impact your life, what’s it doing to the person who deals with abuse on a daily basis as a routine part of their job? Again, while this cost is practically impossible to quantify understand that it’s costing you in more ways than purely financial loss.
Crippling Cost #6: Stifled Growth
As with every other business, the life blood of your business is cash-flow. Without it your business will quickly suffer cardiac arrest. But with your cash-flow tied-up in unpaid accounts, your debtors are effectively strangling your cash-flows and in turn suffocating your growth.
Again, this is a cost that’s practically impossible to gauge but understand… having your money tied-up in unpaid accounts is ruinous for both your wealth as well as your ultimate financial security!
Crippling Cost #7: Un-Recovered Accounts
The last hidden cost of unpaid accounts is the actual income lost from failing to recover your debts. Unfortunately, most businesses hang-on to their overdue accounts way too long. And if there’s one irrefutable truth when it comes to debt recovery it’s the longer an account remains unpaid, the less money you’ll ever see again.
So by ineffectively chasing debts for months and sometimes even years money you work so hard to generate is being needlessly burnt. And while it might sound crazy, it’s a mathematical fact that failing to recover a $1,000 debt is the same as missing out on $12,500 of new business! That’s the true hidden cost of an un-recovered account.
The Quick And Easy Solution
Thankfully each of these seven clouds is lined with gold. You see, each and every cost described above shares one and only one root cause. And when you quickly and easily rid yourself of this solitary cause your profits can’t help but soar.
So what is the root source of all this loss?
Your lack of a proven, powerful~ process to recover accounts. Now if you lack such a system… there’s no shame in it. You’re in the same boat as 99% of businesses and frankly it’s not your fault. After all, who’s ever shown you how recover your accounts properly? Certainly not any Debt Collection Agency!
However, by having an affordable, simple Debt Recovery System working for you in your business you’ll automatically eradicate every hidden cost holding you back once and for all.
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