Overdue Accounts: 7 Ways They Ravage Your Profits

Right up there with filing tax returns and firing staff, chasing overdue accounts is a time wasting pain in the backside you’d rather not deal with.

In light of its demoralizing nature, it’s tempting to delay recovery of your overdue accounts. But the hassle of chasing bad debtors pales in comparison when you consider the seven hidden ways your overdue accounts are suffocating your business.

7 Crippling Costs Of Overdue Accounts

Crippling Cost #1: Communication Costs

The first cost of chasing unpaid 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 Expenses

On average businesses spend 9.5 hours a week chasing their overdue accounts. Even paying someone 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: Opportunity Lost

Even more costly than employee wages is the opportunity lost by employees chasing debtors rather than drumming up business. Imagine the impact on your bottom line if a staff member 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 tying up your employees time recovering accounts you’re flushing tens if not hundreds of thousands of dollars down the drain.

Crippling Cost #4: Lost Productivity

Similarly, every minute you waste dealing with overdue accounts personally is a minute you’re not producing. What’s critical to understand is you’re the principal money earner and you’re time is too valuable to waste even a second chasing overdue accounts. 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-making responsibilities. While the ultimate cost of this to your business is incalculable what you can be certain of is that it’s huge!

Crippling Cost #5: Emotional Toll

With the exception of some pretty rare individuals, virtually everyone abhors chasing people for money. Not least because of all the lies and abuse that you’re subjected to when dealing with these people. At the risk of sounding a bit airy fairy all that negative energy, all that anger and frustration… a fair whack of it gets passed on to your accounts manger, darkening their mood and in turn infecting your entire staff.

Now before you scoff, I’d like you to imagine you’re being verbally 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 one abusive incident can impact your life, imagine what it’s doing to the person who deals with abuse daily as a regular part of their job? Again, this is a cost that’s practically incalculable but don’t kid yourself… it’s devouring your profits each and every day!

Crippling Cost #6: Stifled Growth

As you know, cashflow is the life blood of every business. Without it your business will struggle to survive let alone thrive. But with your revenues tied-up in unpaid accounts, your debtors are effectively choking your cash-flows and in turn stifling the growth of your business. Again, this is a cost that’s practically impossible to gauge but understand… having your money tied-up in unpaid accounts is devastating] your wealth and ultimately your financial security!

Crippling Cost #7: Un-Recovered Debt

The seventh hidden cost of overdue accounts is the actual income lost from uncollected debts. You see, most business owners hang-on to their unpaid accounts 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 throw away. So by ineffectively chasing debts for months and sometimes even years you’re needlessly kissing away money you’ve worked so hard to generate. And while it might sound crazy, it’s a mathematical fact that failing to recover a $1,000 debt is the same as losing $12,500 of new business! That’s the true hidden cost of an unrecovered account.

The Quick And Easy Solution
Now before you get in your car and look for a bridge to jump off there’s actually a silver lining here. The good news in all of this is there’s one and only one root cause to all this loss taking place in your business. And that one cause can be quickly and easily eliminated in a single step.

So what is the sole source of all this loss?

Your lack of a proven, powerful process to recover accounts. Now if you lack 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. 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 (which includes powerful Debt Collection Letters) working for you in your business you’ll instantly eliminate the headaches and hidden costs holding you down once and for all.