CPA’s and accounting organizations offer very important and valuable services to all size businesses. Small business owners, as well as major companies and corporations, depend on their and expertise. This is particularly true during tax season.
As federal, state and local governments require businesses to maintain accurate and timely financial reports and statements, most organizations rely on accountants to prepare these reports.
Yet, while helping their business customers be more profitable, it’s very common for CPA’s to have to deal with cash flow problems of their own, with past due receivables from some of their delinquent business customers. This is particularly true during the very frenzied and busy tax season. That being the case, CPA’s can greatly improve their cash flow by hiring outside collection agencies.
The Depreciation 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.
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 receivables to debt collection agencies is a prudent and reasonable business decision. Since they are experts in collecting past due accounts, they are better equipped with the resources, equipment and professionals. And they can do it at a much lower cost than can be done in your company.
Any time spent on activities outside of your core competencies, is profits-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 know-how that spending for advertising and marketing is necessary for businesses to acquire new customers. Though, many businesses tend to see advertising as the only means to gain new customers and grow already narrow profit margins.
Often overlooked is the tremendous value lying dormant in your uncollected past due debt. It should also be mentioned that when taking in account your past due debt, you’d 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 accounts 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.
Adding Value For Your Business Client
Businesses are always looking for new ways to save money and cut their costs.. As their CPA, you can show additional ways to save, advance cash flow and advance your clients’ financial bottom line.
By impressing upon them the need to quickly turn over non-performing delinquent receivables after their internal efforts have proven unsuccessful, you can show them the cost savings in lost opportunity dollars, the depreciation of past due receivables over time, as well as the savings from the additional staffing, resources and time needed to continue to pursue bad debt internally.
You can also show your customers the increase in your own cash flow and operating efficiency.Showing your business customers 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.
