1. Determine the right time
In order to bring the costs and benefits of accounts receivable management back into balance, companies should decide at what point it no longer pays off to use internal resources and whether an alternative, such as selling its receivables, could make economic sense. A one-off sale of receivables could, for example, be a good option for a portfolio of receivables that has accumulated over the years. An even more sustainable solution is the ongoing sale of receivables. Depending on the expectations of the company, this can take place from the second reminder or after several months of conducting its own collection. Companies should seek in-depth advice and find a tailored purchase offer.
2. Demand transparency and recognise sustainable offers
What is the value of a receivables portfolio? There are no rules of thumb here, because there is no simple answer to this question. Aspects such as the underlying transaction, from which the receivables result, the sales channels, the credit rating, the receivable amounts, the age of the receivables and the credit rating of the customer must be included in the assessment, as must the previous collection measures. This requires both an open dialog between the provider and the potential buyer and extensive experience of the buyer in the purchase of large B2C portfolios. Especially with the ongoing sale of receivables, companies need to know whether the business partner has correctly identified and assessed the relevant influencing factors. Only then can companies ensure that an offer for the ongoing purchase of their receivables is a sustainable solution.
3. Secure reliable collection – including globally
What’s clear is that the customer relationship is of fundamental importance in any company. This is the case even if a customer does not pay. Customers are often only temporarily in a difficult financial situation. Depending on the scale of the total debt of a customer, such a phase may last many years. Generally, it is important to seek a working solution together in order to settle the debts. In any case, only legal collection measures must be used. Accordingly, the business partner should have the necessary experience and have good instinct in dealing with all kinds of customers, as well as observe respectful conduct at all times.
Since many companies offer their products or services in more than one country, the local collection competence is another important selection criterion for the business partner. This not only relates to linguistic and cultural competences. Expertise regarding the legal collection processes is also critical, since they can vary significantly from country to country.
From my discussions with companies, I know that the concept of “outsourcing” the customer relationship can often be a considerable obstacle to the sale of receivables at first. Nevertheless, I am also convinced that any serious business partner will discuss any possible concerns and needs of the company. There are multiple possibilities here, from scaling collection fees, the retransfer of individual receivables where there are specific image risks to the possibilities of recovering customers once the debt has been recovered. So it always pays off to have a personal discussion.