The MSME sector is one of the sectors that has been hit hard by the Covid-19 pandemic. This epidemic has almost paralyzed the wheels of the domestic economy, along with the high threat to the community to lose household income, because they are unable to work due to the rampant layoffs with the enactment of large-scale social restrictions policies. This certainly affects the ability of MSME debtors to pay off their debts, thereby increasing the potential for bad loans.
Did you know that maturing debt will affect your cash flow? Many companies falter in bankruptcy, not because their businesses are unprofitable, but because they cannot collect their debts.
For B2B businesses, dealing with non-paying customers can lead to bad credit, disrupt cash flow, and increase stress. There are many ways and strategies to be able to get the rights that become receivables. For companies that run B2B businesses, what they don’t want is bad credit due to customers not being able to pay their debts. Better to receive late payments, or no money coming in at all.
Normally in a B2B business, payments will be made according to the invoice payment date, but there are obstacles that make it stagnate. Although it can be annoying, approaching customers who have not paid is not difficult but also not easy. The final step that may be taken is legal action, but this will be more time-consuming and increase costs.
Bad credit in business is a problem that must be resolved immediately. If it is ignored, over time it will have a major impact on the financial viability of the business entity, so a collection agency is needed to collect receivables from the borrower or debtor. This collection agency is usually part of a bank or a third party commonly known as a Debt Collectors.
Bad debts result not only in profit losses, but also in the monetary assets of the company and potentially the viability of the entire business itself.
Why do companies fail to collect debts?
- The company does not know the right strategy or the most effective technique in collecting debt
- They do not have qualified human resources with proper training and proper skills to perform debt collection
- Collects often cost more money than companies are willing to spend – with no guarantee of results
- Debt collection efforts often take a long time, which can affect workflow and overall company productivity
- They are afraid of losing their customer base or risking their good reputation due to harsh collection methods
In everyday life, debt problems can indeed occur, both experienced by individuals and companies and it is very difficult to avoid this problem. Debt made by individuals of course there is an urgent need that must be met and they borrow it at a bank or money lending service. Companies also sometimes need loan funds from banks or others to be able to expedite and develop the business they run.
In debt matters, the problem is the payment system by the debtor. It is not uncommon for borrowers to find it difficult to collect from a predetermined payment. This will add to various problems if not addressed immediately. Do not rule out the possibility of causing losses from the lender of money which is getting higher.
Therefore, every company or individual as a lender needs special strategies and techniques to overcome them. In order not to drag on giving an extension of time so that problems with the borrower are immediately resolved.
In a company, receivables become very important when the company must determine the optimal amount of receivables. In addition, receivables must also be managed efficiently, because it involves profits and costs arising from the existence of the receivables themselves.
A good receivables policy is a policy that can optimize receivables management by considering the benefits of the receivables. For this reason, it is necessary to manage receivables in order to manage receivables in a company.
Management of the company’s receivables includes starting from credit sales to settlement. This is intended so that all processes run smoothly so as not to cause a buildup of capital which results in the company’s operations.
Receivables management must start by making careful planning for lending or credit sales activities to the company, controlling the collection of receivables based on their maturity, and reviewing the policies that have been implemented.
Receivables arising from the sale of goods or services made on credit. In other words, receivables are debts from other parties in the form of a result of purchasing services or products that they do on credit. In terms of accounting, receivables are company demands to external parties which are expected to be settled by receiving the appropriate amount of cash.
It is normal for a company to have receivables because in reality, many business actors apply credit payment policies. Although it is actually better to make sales in cash, receivables can also increase business profits.
The reasons for implementing the receivables policy are numerous, one of which is the limited purchasing power of consumers. With the existence of receivables, it is expected that consumers will still buy or consume the products or services you offer so that sales will continue.
However, in practice, of course, it is not as easy as imagined. Often there are bad debts or uncollectible which will have a bad effect on the company. Therefore, the company must make and carry out good and correct procedures related to its receivables for the betterment of the company.
One way to prevent bad debts or uncollectible debts is to manage receivables properly and effectively. To be able to help overcome this debt problem, it is necessary to have a debt collection service or Commercial Debt Collection for companies and individuals.
Who will be your business partner to collect and recover your commercial debts effectively without damaging the customer relationship by taking a professional, practical, and legal approach.