7 Ways Unpaid Accounts Cripple Your Business
Right up there with filing tax returns and firing staff, chasing overdue accounts is a time consuming pain in the neck you'd rather not deal with.
Right up there with filing tax returns and firing staff, chasing overdue accounts is a time consuming pain in the neck you'd rather not deal with.
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: Expense Of Communication
The first cost of chasing overdue accounts is the actual expense of communicating with your debtors. The paper. The printing. The stamps. The phone calls. Like drips from a leaky tap... each drop appears small and insignificant but left unchecked they insidiously drain your profits.
Crippling Cost #2: Employee Wages
The average business spends 9.5 hours a week chasing their unpaid accounts. Even paying an employee a measly wage of $12 per hour, that ads up to $5,928 ever year! Now I'm sure you'd agree that six grand would be better off in your pocket than spent chasing bad debtors.
Crippling Cost #3: Wasted 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: Poor Personal Productivity
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 scoff, I'd like you to imagine some one's verbally abusing you right now. If you're like most people you'll feel angry and violated. And you'll carry those emotions for days. No matter how strong you are, your performance, your decision making and your relationships (both at work and at home) can't help but suffer if you're festering with these emotions.
So if that's how one abusive incident can impact your life, imagine what it's doing to the person who deals with abuse day-in, day-out as a routine part of their job? Once again, this is a cost that's practically impossible to quantify but don't kid yourself that it doesn't eat away at your profits at multiple levels each and every day.
Crippling Cost #6: Impaired 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: Lost Revenue
The final hidden cost of overdue accounts is the actual loss of income that results from uncollected debts. You see, most business owners hold-on to their debts way too long. And if there's one debt recovery law that's set in stone it's the longer an account remains unpaid, the more money you'll flush away.
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 Answer
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 sole source of all this loss?
Your lack of an efficient and effective highly systematized process to recover debts. Now if you don't have such a system... don't beat yourself up about it. You're in the same boat as 99% of businesses and frankly it's not your fault. Chances are no one'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 eliminate the nightmares and hidden costs keeping you down for good.
Right up there with filing tax returns and firing staff, chasing overdue accounts is a time consuming pain in the neck you'd rather not deal with.
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: Expense Of Communication
The first cost of chasing overdue accounts is the actual expense of communicating with your debtors. The paper. The printing. The stamps. The phone calls. Like drips from a leaky tap... each drop appears small and insignificant but left unchecked they insidiously drain your profits.
Crippling Cost #2: Employee Wages
The average business spends 9.5 hours a week chasing their unpaid accounts. Even paying an employee a measly wage of $12 per hour, that ads up to $5,928 ever year! Now I'm sure you'd agree that six grand would be better off in your pocket than spent chasing bad debtors.
Crippling Cost #3: Wasted 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: Poor Personal Productivity
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 scoff, I'd like you to imagine some one's verbally abusing you right now. If you're like most people you'll feel angry and violated. And you'll carry those emotions for days. No matter how strong you are, your performance, your decision making and your relationships (both at work and at home) can't help but suffer if you're festering with these emotions.
So if that's how one abusive incident can impact your life, imagine what it's doing to the person who deals with abuse day-in, day-out as a routine part of their job? Once again, this is a cost that's practically impossible to quantify but don't kid yourself that it doesn't eat away at your profits at multiple levels each and every day.
Crippling Cost #6: Impaired 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: Lost Revenue
The final hidden cost of overdue accounts is the actual loss of income that results from uncollected debts. You see, most business owners hold-on to their debts way too long. And if there's one debt recovery law that's set in stone it's the longer an account remains unpaid, the more money you'll flush away.
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 Answer
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 sole source of all this loss?
Your lack of an efficient and effective highly systematized process to recover debts. Now if you don't have such a system... don't beat yourself up about it. You're in the same boat as 99% of businesses and frankly it's not your fault. Chances are no one'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 eliminate the nightmares and hidden costs keeping you down for good.
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To help you recover more of your debts faster and cheaper The Debt Doctor's Debt Recovery website has 12 powerful free tools and resources. For instance, to download free debt collection letter templatessimply click either link above.