Ensuring liquidity despite coronavirus: Why outsourcing debt collection is worthwhile at this point in time.
In the course of the coronavirus pandemic, many companies have been struggling with cash flow issues. According to Andreas Behmenburg, Regional Sales Manager at EOS Germany, the time has now come to address the issue of professional receivables management. In this interview the EOS expert explains how companies can identify a reputable debt collection partner.
- A well-functioning receivables management system delivers important liquidity to companies during the coronavirus pandemic.
- However, there is a lot of effort involved when companies handle this process themselves, which is why it is worthwhile working with an external debt collection partner.
- A reputable debt collection company can be identified by the way it treats defaulting payers and the range of communication channels and payment options it offers.
Andreas, in times of crisis, liquidity is absolutely vital to a company’s survival. Can outsourcing receivables help?
Definitely. Receivables management is not part of a company’s core business and usually receives little attention from management. The amount of work involved in efficiently recovering receivables should not be underestimated and involves personnel resources, legal expertise and essential technical systems that also cost money, for example in the form of software license fees. EOS specializes in this field, so many of our processes are automated and therefore much more efficient than at companies that have to do these tasks manually. In addition, the companies themselves are only allowed to charge dunning fees in conjunction with a claim, whereas debt collection service providers can charge for losses arising from the default in accordance with the German Lawyers’ Remuneration Act (RVG), which has positive economic implications for the client.
Andreas Behmenburg has been working in receivables management since 1994 and is an expert in the sector. Since 2005 he has been employed by EOS Germany as Regional Sales Manager.
Is the coronavirus crisis already impacting the work of EOS?
So far, business has been very steady. The effect of the crisis on the payment practices of defaulting payers cannot yet be discerned. However, for the last quarter of 2020 and the beginning of 2021 a significant increase in the number of firms going bankrupt, and consequently, an associated rise in unemployment, can be expected. Already, in our discussions with clients we are noticing that the issue of liquidity has a completely different significance compared with before the crisis. This is why now is exactly the right point in time for companies to give more thought to professional receivables management.
How do you identify which debt collection service provider you can trust?
First of all, a good debt collection service provider will be a member of the BDIU (Federation of German Debt Collection Companies), or equivalent professional association in other countries. But it should also treat defaulting payers fairly and respectfully, so that after the debt has been settled they can again avail of the creditor’s services. Another sign of a good debt collection company is that it is personally accessible to defaulting customers via their preferred communication channels and at their preferred times from morning till evening. The service provider should therefore be able to use all channels like email, SMS, personal visits or a chat function with debt collection specialists. This also includes offering the defaulting customers the option to use their preferred method of payment, for example PayPal or ApplePay. Moreover, a reputable debt collection company will only levy fees as permitted within the legal framework, because as a rule, the client (creditor) would like to be able to continue to do business with the consumers after the debts have been settled.
Is your company looking for a competent debt collection partner? Then please get in touch with us!
Photo credits: Benne Ochs (2), Getty Images