Commercial Collections Blog

Many elements make up a sound business credit application.  Seven of the more important elements are:

1. Audited financial statement request (or at least a section in the application where the customer can complete estimates of his or her firm’s key financial information, with signature, title and date lines for the debtor to confirm the information as being accurate);
2. Trade and banking information sections should allow for at least five references with room for complete addresses, phone numbers, contact names and email addresses;
3. Personal guarantee section (especially if a smaller or start up corporation);
4. Complete company name, address and federal identification number;
5. Product(s) sold and specific industry the debtor is in;
6. Management resume, including a section requesting information on any liens judgments, defaults or other negative information anyone in management (or any companies owned by anyone in management) has ever had filed against them;
7. Signature, title and date lines that include a statement verifying the above information as being accurate.

Having an effective debt collection strategy, the business credit application can help you identify your strengths and weakness, is part of knowing your client that may became a debtor. If you have any questions on business debt collection please contact us.

Technorati Tags BUSINESS BAD DEBT, business credit report

Liquidity ratios are probably the most commonly used of all the business ratios. Creditors may be particularly interested in liquidity ratios because they show the ability of a business to quickly generate the cash needed to pay outstanding debt. This information should also be very interesting since the inability to meet short-term debt could be a problem.Liquidity ratios are also sometimes called working capital ratios because working capital is what they measure.

Often liquidity ratios are examined by banks when they evaluate loan applications. Once you get the loan, your lender may also require that you continue to maintain a certain minimum ratio as part of the loan agreement. For Business tools like, business debt recovery tool where you can see the aging of the Accounts Receivables

Technorati Tags BUSINESS BAD DEBT, business debt

­A recession is a prolonged period of time when a nation’s economy is slowing down, or contracting. Such a slow-down is characterized by a number of different trends, including:

• People buying less stuff
• Decrease in factory production
• Growing unemploymen
• Slump in personal income
• An unhealthy stock market

By the conventional definition, this slow-down has to continue for at least six months to be considered a recession.

This definition really raises more questions than it answers. What does it mean for the economy to slow down? Why does this happen? How are all these factors related? And what exactly is “the economy”?

People talk about the U.S. economy as an independent entity, but it is actually the result of millions of people’s actions. Economists use all kinds of esoteric terms to describe the connection between people’s actions and the economy as a whole. But you can understand the basic idea of this connection by looking at only a few basic concepts: producers, consumers, markets, supply and demand and all of this causes bad debt, Burt and Associates can help you call today 1-877-740-7839

Technorati Tags BUSINESS BAD DEBT, collection agency, Debt Collection

It’s harder than ever to get customers to accept price increases, thanks mainly to Alan Greenspan. But you’re making a mistake if you don’t raise prices on a regular basis.

Alan Greenspan is a wonderful guy, and he has my wholehearted support in his battle against inflation. I doubt, however, that he has the same warm feelings about people who share my philosophy on prices. I believe that as a matter of sound business practice, it’s important to raise prices regularly.

Otherwise you’ll be letting your profit margins erode and undermining the value of your company. If you’re not careful, you could wake up one day and discover you’re in serious trouble. At that point you may have no choice but to take the kind of action that will drive your customers crazy.

“I don’t have a choice a small business told me ” We haven’t had a price increase in 10 years. I’ve been giving the staff raises every year, and I haven’t been getting any additional income. Now I’m at a point where I can’t go on without a significant increase. I won’t be able to pay my bills. The place won’t survive.”

Small businesses  has my sympathy. It’s never easy to raise prices, and it’s particularly tough to raise them in an environment like this one, thanks mainly to Mr. Greenspan. He’s done such a great job of fighting inflation that most people think prices shouldn’t go up at all. As for big increases, you make them at your peril. There’s simply no way to do it without antagonizing customers and thereby putting your most important relationships at risk.

Faced with such resistance, a lot of businesspeople are tempted to forgo price increases altogether, or at least put them off for as long as possible. If you do either one, however, you’re making a big mistake. Granted, you may not feel the pain for a while. If your sales are going up, you’ll probably be able to take home the same amount of money from one year to the next. As a result, you may not see the risks you’re taking. In the short term, you’ll think you’re doing fine.

But, in fact, two things will be happening. First, your profit margins will be shrinking. Why? Because your costs will be going up. Even in Greenspan’s America, certain costs always rise. It’s what I call “creeping expenses.” Some types of expenses have a life of their own. If you don’t watch them like a hawk, they go up all by themselves. They may even go up if you do keep an eye on them.

In most small businesses, for example, you can count on payroll increases every year. You can expect regular hikes in insurance rates as well, and I’m not talking just about health insurance. The costs of utilities and supplies also have a tendency to rise over time. OK, some things are cheaper these days — basic phone service, for example — and computers let people work more efficiently than before. Nevertheless, your average costs per dollar of sales are going to rise from year to year. They may rise only 2% annually, but compound the increases over 5 or 10 years and eventually you won’t be earning a profit anymore — unless, of course, you raise prices.

Even if you don’t let the problem go that far, however, you’re damaging your business in other ways by not raising prices on a regular basis. For one thing, you’re gradually undermining the perceived value of your services or products. Like it or not, there’s a natural tendency to link quality and price. I’m not saying you always have to charge as much as the most expensive suppliers, but if the gap between your prices and theirs gets too large, customers will start to regard you as the cheap alternative in the market.

At the same time, you’ll be undermining the real value of your business as a whole. That’s a point most small-business owners miss. They look at the company only as a source of income. They forget that it’s also a major asset, probably their most valuable one, and — like any asset — it needs to be maintained.

That means, among other things, making sure the company has strong profit margins — as good as or better than the rest of the industry’s margins. If you let your margins erode, you’re going to have trouble when you try to sell the business. Indeed, you may not be able to sell it at all.

It’s sort of like selling a house. If the place needs a new roof, buyers will discount the price accordingly, or they’ll look for a house that doesn’t need one. By the same token, business buyers are going to shy away from a company with weak margins, especially if they’re weak because prices are too low. Who wants to buy a business and immediately start raising prices? Even under the best of circumstances, it’s tricky to maintain a customer base through a change of ownership. It’s almost impossible when you have to begin by doing something that will antagonize every customer you have.

So I’m sorry, Mr. Greenspan, but I’m going to keep raising my prices, and I’d advise most other businesspeople to do the same. The increases don’t have to be big ones. In this economy they can’t be. I have to fight for every increase I get, but I always insist on raising the price at least a little. I have to admit, however, that there is one group of people I’d encourage to ignore my advice and give Mr. Greenspan a hand in his fight against inflation: my suppliers.

Technorati Tags BUSINESS BAD DEBT

Technorati Tags BUSINESS BAD DEBT

How common is it that there are consistently problems collecting money from customers? Some business owners, especially new business owners are so eager for a sale that they don’t document or discuss payment, then they don’t want to offend the customer by asking for their money. Is it worth it for a small business to attempt to go after the money due? It depends on the amount of the bill and what information you already have on the customer, such as contact information so you can get a hold of them or even take them to small claims court.

What legal issues are involved with collecting money? You will have to follow the Fair Debt Collection Practices Act (FDCPA) and any laws in your state. You should also have a contract or signed agreement to protect yourself.

What are some of the ways a company can protect itself, or precautions that can be taken? Should a company change the way they do business in any way? Always get a credit application and check references if extending credit. Have a good credit policy and stick to it!

What are the steps that a company needs to take to collect money due to them? If your calls or letters don’t prompt payment, place your account for collection. Please check our Interactive Business Debt Recovery Chart

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Burt & Associates is a SAS-70 Type II certified and compliant Commercial Collection Agency. Please give me a call today to get us working for you.

Regards,

Jerry Curtis
President & CEO

Educational Tidbits For Today’s Credit Executive

Collecting Past-Due Bills

Whenever the economy slows down or has trouble regaining its strength, credit and finance executives may notice troubling signs of a slowdown in payments from debtors. Slow-paying accounts can cost creditors extra time and money in collection attempts, fees for collection agencies and legal costs. All of this can be a drain on the company’s cash. Therefore, it is essential that those in charge of the credit/collection function take extra care to make sure statements have clear payment terms on them. They must also make prompt phone calls on late-paying accounts and properly log all correspondence with debtors, noting the day and time each customer is called.

The Credit Manager’s Q&A Corner

QUESTION: Explain what a debtor-in-possession is.

ANSWER: A debtor-in-possession is a bankrupt debtor that remains in control of its operations. That’s in contrast to having a trustee operate the company.

Technorati Tags BUSINESS BAD DEBT, business debt