The success of your business is as good as the money you are able to collect from your customers. It’s possible to see a business do well in all other aspects but flunk in debt collection, which can potentially cripple its operations. One way you can improve your debt collection is by investing in debt collection software. Here are five reasons why you need debt collection software.
Automated Software KeepsBad Debt at Minimum
As businesses grow, the amount of credit extended to customers tends to increase. Some of the debts can stay for long without being settled, necessitating a bad debt write-off. The bad debts written off are tantamount to expenses or loss in an accounting sense since the business has low chances of recovering such debts. Some of the bad debts are occasioned by the failure of companies to keep up with payment due dates.
Debt Collection software can come in handy in keeping track of the payment dates, showing the ones that have been settled, and showing you the overdue ones. Therefore, it becomes possible for your business to keep a tab on overdue debts and regularly remind the customers to settle them. This will enable your business to keep bad debts at a minimum because it will have visibility of the debts that are on the verge of becoming bad debts, making you put more effort into collecting them.
Software Creates Efficiency
Debt collection software is able to do a lot of work that would otherwise have taken account receivable a lot of time to do it manually. For instance, prepare an annual customer aging report can be tedious and time-consuming if it was to be done by a human being, but you can accurately generate the report instantly using the software. The automation of debt collection frees up time for the employees to focus on other tasks instead of spending a great deal of their time managing the payment of debts manually.
The employees can focus on other aspects of tasks that are better performed by humans, including analyzing the reports extracted from the system, making calls to creditors, and documenting their feedback. With the debt collection software, you only need a handful of accounts receivable employees, saving you administrative costs.
Automated Systems Create Faster Collection of Payments
The software can easily streamline the payment process, including determining the payments that are due, preparing invoices, and tracking the debts, thus making the collection process more manageable. With the software, you won’t miss out on unpaid invoices or payments, increasing the chances of timely payments.
Many companies have 30 days credit terms which mean that the customers should settle the invoices in one month. You can check the payments that are about to fall due and send the customer invoices or even send them a reminder in due course. Many customers are likely to stick to payment agreements, therefore, settle the debts in good time.
Low Accounts Receivable Financing costs
Accounts receivable financing helps businesses access capital secured by outstanding debts or invoices. The company can use the money to fulfill its immediate financial obligations like paying its suppliers and employees as it waits for the customers to settle the invoices. However, as a business, you will be charged a weekly fee for the time the invoices remain unpaid, and when the invoice is paid, your customers will be expected to pay the lender directly, depending on the arrangements you have.
Consequently, the longer the invoices remain unsettled, the more the charges you will incur. Companies that you debt collection software have high chances of collecting the money faster compared to those that do not employ such technology. Therefore, using debt collection software can help you collect the debts in good time, which will reduce interest costs on the accounts receivable.
Software Can Improve Customers Relations
You can have a working relationship with your customers as far as debt collection is concerned. One way to do this is to ensure that information about payment agreements, invoices, and due dates are accurate. You don’t want to get into loggerheads with your customers simply because there was an error in an invoice or you sent a payment reminder before the due date. You can automate the process by employing debt collection software to help minimize mistakes that could spoil your relationship with the customer. Such errors include duplication of invoices or incorrect invoice amounts.