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If You Think Outsourcing Is Expensive, Try Ignorance


Yes, it is a plug for our services. That is what you were thinking weren’t you? We make no apologies for the belief we have in our ability to make a difference to the cash-flow position of almost any company that extends credit to its customers. Our experiences have led us to work with companies from all sectors and all sizes, which helps us transition seamlessly into acting on behalf of almost any business seeking our support whether it is a law firm whose own clients operates on a pay-when-paid basis or a construction company whose customer has paid it a retainer but is not approving their latest invoice for it, we have you covered.


But do not switch off just yet, because the decision to start blogging come about because of much more than just a desire to attract a few extra sales for JSP Credit Management. It was started for the same reasons that we became a company in the first place; To reduce the number of businesses which are going into administration or liquidation because of cash-flow problems arising their customers paying them late, or not at all. Blogging seems to be an ideal way to part with the vast amount of knowledge and experience which has been acquired over the last 15 years of working in the credit management industry, in the hope that the readers of it can apply some of that knowledge to their practices and see the improvements in their cash-flow that we have witnessed ourselves over the years. It is that motivation that continues to fuel all the work that we do at JSP Credit Management.


We hope the above does not make it sounds as though we are suggesting that we're going to save the economy or anything like that. We understand we just a piece of a very big jigsaw made up of a variety of different pieces, ranging from other (much larger) debt collection agencies, credit management companies, insolvency practitioners, management consultants, business coaches and then away from the commercial side there are NGO’s, charities, politicians, local authorities, and the government itself who shape relevant and applicable legislation by which our services, conduct and practices are guided.


The JSP Credit Management army is not big enough for doing that on its own and while we are part of the war on late payments, we are more narrowly focussed on a battle that we do have more control over. We have titled this blog “If you think outsourcing is expensive, try ignorance”. We tried to keep it enigmatic and ambiguous intentionally for reasons which will be explained further along in the blog. Yet obviously, it refers to the hesitation on the part of some businesses to employ the services of companies such as ours to handle the recovery of their overdue invoices. It is not difficult to imagine why. If you gave a business owner the choice between getting £100 back for an invoice worth £100 or only getting £75 back, without any other conditions present we are quite sure that they would choose to get the full value of their invoice back every time.


So what’s the case for outsourcing? Well, let’s re-run the scenario. If you gave a business owner the choice between getting £75 back for a £100 invoice or nothing at all, we are quite sure again that they would choose the option to have £75 back rather than nothing at all. But why do we need two scenarios to demonstrate the problem? It is because the first scenario represents the mindset of those hesitant business owners reluctant to outsource who are holding on to hope that they will get paid eventually for their invoice. And of course they might!


However, our experience is that the older an invoice is the more difficult it is to collect and the more overdue, it becomes therefore the chances of a random payment being deposited into the business account or a cheque for it dropping through the letterbox become less and less. So at some point, most business owners end up being forced to confront scenario two - although it usually does not present itself this way. It usually gets to a point where a business owner will give up hope of ever getting paid for it after becoming exasperated with attempts to recover the payment from their customers and some point in time later they will eventually bite the bullet and process the write-off on their system.


Some/many companies write off millions each year in provisioned debt. However, if a company can afford to provide for millions in their aged debt then it is unlikely to have the same impact on them as it would a smaller business who is facing the same predicament with an amount that comprises a much larger portion of their overall forecasted cash-collection targets for the year. Therefore, the decisions which gets made early on about whether to take a chance on scenario 1 pulling through for them or outsourcing and taking a hit on the full value of their invoice but still getting the majority of their invoice paid are even more important for them. Admittedly, it is not a straightforward decision. It will require careful consideration of a variety of factors such as how overdue the invoice is, the size of the invoice, the strength of the relationship with the customer, and the reasons given for non-payment just to start with.


On another point, our biggest revenue stream here at JSP Credit Management comes from our bad debt recovery service. We think we can safely deduce from that fact that people are more inclined to invest in a bad debt recovery service than they are in any of the other services on offer here, which can be applied before the point at which an invoice becomes overdue for payment. The challenge is not necessarily convincing companies to outsource their overdue to companies such as ours for recovery of payment but to subscribe to an approach which we know to be true through our experience but remains a hard sell to clients: That prevention is better than cure.


So when we say “outsource” in our blog title, yes we mean the bad debt recovery service, but more so than that we are referring to the work that gets done before an invoice becomes due for payment. This will result in far greater collection rates than simply waiting until payment is due before collection activities start. Some companies do not have the capital or infrastructure to set up their credit control team and that is why we do what we do because we know how impactful it can be and therefore how expensive it can be not to do it. A great many companies out there will not even think about approving an invoice or sending a cheque until they have been prompted for payment. The responsibility for it starts with us.


We are here to do our bit to help businesses safeguard their cash flow against late payers or debtors that are refusing to pay, so if you have been struggling to get an invoice paid and would appreciate the support of a team who pride themselves on operating in a way that is mindful of the factors discussed above then visit our website at www.jspcreditmanagement.co.uk and contact us to discuss your needs. We operate on a no-win-no-fee basis for bad debt recovery and our credit control and credit risk services can be ordered via our website with the littlest of hassle.

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