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.
