3 Vital Reasons CPA's And Accountants Should Outsource Their Delinquent Accounts To Debt Collection Agencies

By: David Montana Click author's name for more of his/her articles

Accounting firms and CPA's offer highly valuable services for companies of all sizes. From small organizations, to larger, major corporations, their know-how and skills cannot be underestimated. This is especially true during tax season.

As businesses are required by federal, state and local governments to keep accurate and timely financial statements and reports, most organizations depend upon certified public accountants to prepare their reports.

However, as they help increase their customers' financial bottom line, it's typical for many accounting organizations to experience cash flow problems themselves, due to delinquent and unpaid accounts from some of these same business customers. This is very true during the very frantic and busy tax season. As such, by outsourcing to a third party collection agency, an accounting firm can quickly increase their cash flow.

Listed below are three central reasons why accounting organizations need to turn over their non-paying accounts to debt collection agencies:

The Depreciation Of Money Over Time

As a CPA, you're very aware that past due, uncollected money from services already rendered decline 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.

To generate new business requires spending exponentially more in advertising and marketing, than it does to collect from your late and non-paying clients.

Turning over delinquent, non-paying accounts to debt collection agencies is a judicious and reasonable business decision.

Generating profits is your principal competency. Activities that take you away from those core functions, also take away the focus from generating profits.

Grow Your Profit Margin Without Acquiring New Customers

As previously mentioned, you're aware how expensive it is to acquire new customers. Its common knowledge that spending for advertising and marketing is necessary for businesses to acquire new customers. On the other hand, many businesses tend to see advertising as the only means to gain new customers and grow already narrow profit margins.

Don't underestimate the tremendous value lying dormant in your delinquent receivables. It should also be noted that compared to your past due debt, you would have to almost double your new business volume just 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 money 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 seeking ways to trim costs and save capital.. As their accountant, you can offer additional savings and help advance the cash flow to your clients’ business bottom line.

Teaching them the importance of turning over delinquent accounts 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.

You can also show your customers the increase in your own cash flow and operating efficiency.Showing your business clients how to further save money and increase their business bottom line will put you in even better standing with them. It also makes you stand out from others in a very competitive market who similar accounting services.

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About The Author: David P. Montana has authored extensively and worked as a commercial authority in debt collection agency services for thirty years. David offers more helpful tools and resources about debt collection procedures for accountants.