Commercial Collections Blog

Why not just continue to write off those bad debts? What hits the bottom line of your costs ultimately requires growth to the top line in sales.  Take a relatively small outstanding debt balance of $3000 and assume, for this example, the company is operating at a 4%profit
margin.  In order to make up for that relatively small write-off, the company must come up with an additional $86,500 in sales. To most businesses, $86 is a significant amount to have to come up with in sales to simply offset a write-off you may not have had to incur in the first place, Let Burt and Associates show you how not to have write offs.

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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

How to get business credit with no personal guarantee? That is a very good question. The key to getting business credit with no personal guarantee is to first establish good business credit scores with all three business credit reporting agencies. To do that, you must find vendors, suppliers and credit card companies that will give you a little credit for your business without using your personal credit score as the basis.

Then the real secret is that you must insure that everyone who gives your business credit must report your business payment history to the business credit bureaus. Only by reporting your good payment history to the agencies will they help you to build your business credit scores. Therefore, you must first have registered your company with all three business credit bureaus.

Next, you must have completed all the basic lender approval requirements. If you haven’t done all the simple things you will get declined. These are simple things like having a business license, a dedicated a phone line listed under the legal business name with 411 directory assistance. There are about 20 such simple things. Most lenders, vendors, suppliers, or credit card companies will not approve credit to your business if you haven’t taken the steps to set the company up with the proper licenses, services and your bank.

Lastly, getting approved for business credit with no personal guarantee will require that you have great business credit, you have set up your business right, you accounts are in order, you can show the ability to service the debt, you have some form of assets collateral coverage and that you ask the lender before you apply, what it will take to do so, for more  call Burt and Associates, collection agency, we can help.

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In some instances, you can tell if a company might be irreparable. If a troubled company no longer has an addressable market that is ready to embrace its products or services, that company may be to far gone to turnaround of commercial collections. Moreover, if the company has no clear understanding regarding why it needs to clearly communicate its product’s return to the marketing place or if it can not quantify it product’s value, the hope of any “quick fix” for that troubled firm may be beyond consideration. And just as important an indicator is if the leadership of a troubled firm does not have the ability to become systematic and entrepreneurial-minded. Trying to fix such a company may be throwing good money after bad let Burt & Associates help you with the answers you need in troubles time so that you don”t have to lose your money on bad debt.

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Every 90 days we experience the deja vu known as earnings season. The quarterly festival is promoted hard on sundry business cable outlets — a logical, self-interested move on their part, given focus on the bottom line.

But every 90 days? It’s more than a little silly, considering that quarterly financial statements are prepared using the integral method: According to  the numbers are largely a reflection of management’s estimates for full-year results. Their accuracy leans heavily on estimates of what future quarters will bring. Yet when a company misses  estimates by a penny or two, a precipitous price drop is not unusual.

Subjectivity rules
The fact is that where earnings — in total or per share — are concerned, estimates and subjectivity prevail. After all, earnings are affected by credit policies, financing choices, depreciation rates, reserve accounts, inventory commercial collection accounts, and discontinued segments. And those are only the variables that spring immediately to mind. If a company posted steady annual earnings growth over the past 10 years, only to post a massive business collections write off”s in year 11, were a decade of earnings a mere mirage of commercial collections

Perhaps it’s better to focus on cash flow ; cash pays the bills. But cash flow is also open to interpretation, starting with cash flow analysis methodology. Less industrious companys rely on  as a cash flow proxy. EBITDA uses net income as a starting point and then adds back interest, taxes and the non-cash items depreciation and amortization. Problem is, a company could theoretically report positive cash flow even if it reports no revenue.  

Better to ground cash flow analysis in the  of calculating cash flows. Instead of starting with a reported net income, the direct method analyzes operating, financing, and activities and calculates cash flow created by converting all accrual accounts to cash figures, resulting in a much more insightful analysis compared to the indirect method.

From the overall cash flow analysis will attempt to derive  — cash left for the company after the bills are paid and capital expenditures are made to keep the business humming.

Sounds straightforward enough, except when it isn’t.  often disagree on which items should be treated as capital expenditures, if adequate capital expenditures are being maintained, and if working capital is being efficiently managed. Inadequate investment in capital equipment and in research and development produces high immediate cash flow, although the company is actually cannibalizing itself.

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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

Our Guarantee
This service is 100% gauranteed. If you are unsatisfied with the collection of the account for any reason after 7 days, simply tell me and I will cancel the account, no questions asked.

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