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How Can A Debt Recovery Agency Assist Small Businesses In Recovering From Negative Cash Flow

At a glance

  • How negative cash flow impacts small businesses
  • The help small businesses need while dealing with bad debts

Negative cash flow is always bad news for small-scale businesses as it is for large corporations. Negative cash flow occurs when expenses exceed income within a business. By definition, small businesses lack large cash reserves and capital to pull the strings when the business is going through a recorded phase of negative cash flow. Letting aside catapulting a business to profitability and sustainability, paying mortgages, staff salaries, and other inbound operational expenses become unattainable while a small-scale business faces negative cash flow.

There are going to be some good and some bad days in any business sector.

If your business makes a 10% profit after all costs and you are owed money, multiply that amount by 10 to work out how much more business you need to put through for the same results before the debt.

Debt is very expensive, and it directly impacts shareholder value and dividends. In a small business, this is the quality of life of the business owner.

To keep the business afloat and strive for the ultimate goal, business owners must look towards a concrete solution in times of a bad economy. Many a time, debt recovery agencies have been the helping hand small businesses need to recover from a negative cash flow. Here’s why you may want to contact a debt collection agency in times of such crisis.

Why Small Businesses Should Consider Debt Recovery Agency?

Negative cash flow does not necessarily mean that a business is recording a loss in a given period; however, negative cash flow quickly drains profit and puts a dent in revenue flow. Successive periods of negative cash flow can force a business to the stage of closure. Unpaid invoices (or bad debts) are one of the major reasons why small-scale businesses face cash crises in the form of negative cash flow.

Unpaid invoices are a serious financial obstacle for small businesses, yet an unavoidable one. In Australia, 95 percent of bookkeepers have to deal with issues of bad debts. Bad debts largely affect cash flow within a business – creating a conflict within the business about whether to focus on new projects or try evaluating the books first. Even working on projects in hand necessitates a certain capital investment from businesses which again brings the necessity of dealing with bad debts first – getting the money you are owed first.

Most small-scale businesses record a 7 to 10 percent profit margin. If some portion of this profit is still owed, it turns into the books as unpaid invoices. Until the invoice is cleared and the sum owed is repaid, the business has to cut profit from previous deals to finance an upcoming project. It can also mean the business has to work on another project to record a similar profit margin until the debts are cleared. A line of such projects with unpaid invoices gradually cuts the profit margin for small businesses to the point where there the business is left with inadequate capital to run the business and various operations associated with the business.

Handling Bad Debts Properly

The critical cash problems arising from bad debts make debt recovery closely relevant to any business. However, dealing with unpaid invoices is not always a smooth affair in any business sector. Chasing after unpaid invoices can be a more stressful endeavour than one would like to think. It means investing money, time, and focus that can be poured into other business operations for the betterment of the business. After investing in all of these, there is no promise of a better tomorrow while chasing payment from bad debtors. A small-scale business does need to understand that chasing after payments can do more harm than good.

When the return is not worth the investment, it is not worth the investment at all. Bad debts are a huge issue for small businesses as they directly impact the cash flow within a business. Dealing with such bad finances is necessary, but there are hurdles bookkeepers run into while chasing bad debts – that come in the shape of both money and time. Unpaid invoices are often a time-consuming operation for businesses, as debtors can be unwilling to repay until the matter gets serious. There’s money to invest in pursuit of bad debtors, which often do not yield the result you desire. And having to chase after bad debtors regularly can relay a negative message about your services to the public.

When you feel you are failing to achieve the desired results from your efforts, there is always a better option to go with – letting a debt recovery agency work for you.

How Debt Recovery Agency Can be of Help?

Unless it is the only option, small businesses necessarily do not have the capital to employ a second party to handle their bad debts, and writing off the bad debts is never a good idea. Small business debt collection agencies offer several business options, and small businesses can use some in times of crisis. eCollect has some unique work ethics while working in this market that is hard to come by while working with others who mostly have one goal – money. eCollect does not charge a single penny from your business unless you start receiving your money owed.

Working with eCollect gives you an edge over your bad invoices because recovering money is what they do, and their staff are educated accordingly. The team of eCollect is driven by reliable and transparent debt collection services, and the benefits of working with their team are far-reaching.

  • With eCollect working on your behalf, you will be able to invest your time and money in building your business. With an agency like eCollect, you can put your trust in their services, and it makes it easy to streamline your other business operations.
  • Their team is highly focused and strives for one common purpose – the recovery of your money. No upfront fees and ‘no recovery, no charge.’
  • When eCollect takes on a job of debt recovery, they do with the belief they are up for the job. They continue to work until the recovery is made and do not limit their services to a limited service time.

Ready to get a best solution for your business?

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