Collecting outstanding debts before they age is a critical aspect of any business’ financial management. The Australian Institute of Credit Management estimates that, on average, if a debt is still outstanding six months after the due date, only 67 cents in the dollar is recoverable. If the debt remains uncollected after a year, on average a mere 45 cents in the dollar can be recovered. In addition, employees who are assigned to collecting ‘bad’ accounts are unable to spend their time working on optimising cash flow from non-delinquent debtors.
You will gain the most benefit from engaging Kaizen Enterprises when a debtor has:
Using a professional collection service will often save you time and reduce the collection cost, while freeing your personnel to concentrate on controlling cash flow. Delinquent debt can be very resource intensive to chase and frequently involves insolvent debtors, debtors that have left their given addresses, or people who are professional at breaking promises. If the debtor is short of funds, then the earliest possible discovery of this provides you with the greatest possible chance of collecting the debt.
In most cases debts are collected through focused activity, tenacity, perseverance and persistence. Kaizen Enterprises employs strategies such as:
Kaizen Enterprises usually collects debts on a ‘results only’ basis, which means that we have 100% of our compensation at risk. Although we have a variable fee scale that is determined by factors such as the age of the debt, the difficulty of finding the debtor, and whether collecting the debt involves resolving any previous disputes, we also allocate more time and resources to each debt, which often results in a higher net return.
For example, on $100,000 of debts an agency with a low 5% commission may have a collection rate of just 1 in 3, resulting in a return after fees of $31,666. By contrast, Kaizen Enterprises, with both more at risk and more time and resources allocated to each debt, will often achieve a collection rate of 3 in 5. Therefore if you paid a fee of 20% on the same $100,000 your net return after fees would be $48,000, a 50% better result.