Commercial Collections Blog

The Silent Menace within Accounts Receivables

Potentially lurking in your accounts receivables is a silent menace — unpaid accounts which are not being managed.

The more delinquent accounts are, the less collectible they become.  At 60 days, there is only a 60% chance of recovery, by 6 months, it’s only 30%.  The current dollar amount of the A/R depreciates to reflect the probability being collected —  based on data from the US Department Of Commerce. This rapid loss in value is called Accounts Receivable Depreciation.

Accounts Receivable Depreciation is a silent destroyer of profit margins.  If your collections efforts have not been successful, outsource to a collection agency no later than 60 days.  The longer you wait, the more the chance of collecting deminishes.