Unless your business is awash in spare resources,
it will often make sense to outsource your debt
collection and credit control functions and remain
focused on your core competencies.
If you have only a few customers who consistently fail to pay on time you can make the calls and send the letters yourself; but when the number of delinquent customers passes a certain level, you will be forced to pull resources (e.g., staff) away from productive activity to chase overdue invoices.
Bear in mind that the cost of temporarily hiring a debt collection agency or specialized credit control firm will usually be lower than the cost of a salaried employee dedicated full-time to debt recovery.
Invoice factoring offers another potential solution to the problem of overdue receivables. In a factoring arrangement, a bank or factoring specialist will advance you 80-90 percent of the value of customer invoices at the time of billing, and pay you the remainder once the debt is collected. The added value of factoring is that the factor assumes responsibility for collecting the debts from your customers.
Whether you go for an outsourced credit control services provider or a factor, you will liberate your internal resources to pursue more productive activities.