Accounting firms and CPA's afford much needed services to businesses of all sizes. From small business owners, to major corporations, their expertise cannot be underestimated, very during tax season.
Since organizations are required by federal, state and local governments to keep accurate and timely financial statements and reports, most businesses depend on accounting firms to prepare these documents.
In spite of this, while helping their business clients be more profitable, it's very common for CPA's to experience cash flow issues of their own, with past due accounts from some of their delinquent business customers. This is very true during the very hectic and busy tax season. That being the case, CPA's can greatly advance their cash flow by hiring outside collection agencies.
The Depreciating Value Of Money Over Time
As a CPA, you're very aware that past due, uncollected money from services already rendered decrease in value as more time passes. In addition to spending valuable time, resources and additional staff going after unpaid accounts, it also means this critical time is taken away from acquiring new business.
And it costs demonstrably more in marketing and advertising dollars to acquire new clients, than it does to collect from your non-performing receivables.
Outsourcing non-paying receivables to a debt collection agency is an reasonable and smart business decision. Not only are they experts in the recovery of past due money, collection agencies have the resources, equipment, staffing, and they can do it on an economy of scale that simply can't be done internally in your business.
Any time spent on activities outside of your main competencies, is income-robbing for you.
Grow Your Profit Margin Without Acquiring New Customers
As previously stated, you know how costly it is to draw new customers. Its common knowledge that spending for advertising and marketing is necessary for businesses to acquire new customers. Nevertheless, many companies tend to see advertising as the only means to gain new customers and grow already narrow profit margins.
Businesses should not overlook the tremendous value lying dormant in their uncollected debt. Be aware also that compared to the value of your outstanding receivables, you would have to nearly double your new business volume merely to break even.
It is far less expensive, with more predictable positive results, to outsource to a debt collection agency your unpaid receivables receivable. Monies recovered here can yield much greater net profit to your accounting business. Spending capital on advertising, while ignoring your past due debt is not spending smart dollars.
Providing A Great Value-Added Benefit To Your Clients
Businesses are always looking for ways to cut costs and save money. As their accountant, you have the ability to educate your clients and show them additional ways to save, increase cash flow, thereby improving their financial bottom line.
Teaching them the importance of turning over delinquent receivables quickly when internal collection efforts prove unsuccessful, you make them see the cost savings in lost opportunity dollars, the depreciation of unpaid debt over time, not to mention the savings from reduced internal staffing and resources.
This is especially the case if you are also experiencing improvements in your own firm's cash flow and operating efficiency.By showing organizations how to increase their financial bottom line and save capital, you become a trusted advisor and consultant. This will increase your overall worth to your clients, and make you stand out in a very competitive market.