Commercial debts are a tricky impediment in the progression of a company. While the businesses rightly focus their energies on product development, marketing, operations & logistics and thus revenues, unpaid invoices linger on as an anchor obstructing the pace. Given the tough competition and industry standards, open credit lines are a mandate for existence; however these cumulative debts, more than often, curb the machinery by creating liquidity obstructions. Initially what appears to be a trivial amount, eventually snowballs into a massive debt situation thereby impacting the basic PnL of the setup.
Journey so far…
The problem is rather intricate but it is definitely not new. Since the beginning of commercial existence, tradesmen have had to deal with the menace and given that the problem was known, several attempts have been made to counter.
One of the oldest weapons deployed to combat B2B debt collection issue was barter system. A principle revolving around the simple equation of give and take. A good in exchange for a good, service in lieu of service. While the approach is theoretically logical, shortcomings are abundant & apparent.
Another notion that has been the preferred mode involves advance part payment. These payments are often charged to source raw material & labor required to complete the assigned task. The method certainly provides a security blanket to the supplier, however once engaged in a chain or regular trade, supplier and customers tend to go easy on the pre-defined advance terms and credit side tends to bloat with every new transaction.
Finally, the mounting debt led to advent of a collection department in the company. While the aim was to instate a debt collection department, involved costs led to a bit of deflection. The qualified and experienced accounting / finance department was instead given the responsibility of debt collection. Account receivables management was attributed high relevance and job responsibilities of an already burdened accounting team were further increased.
The solution!
As evident as history could be, it is clear that businesses which have failed to maintain liquidity couldn’t survive the test of times. And thus while many techniques were implemented and yet results weren’t at par with expectations, need gave origin to the concept of outsourcing commercial debt collections and account receivables management. Third party collection agencies thereby came into existence.
ZZest CRM
ZZest Credit & Risk Management Company is a team of veterans providing B2B collection and credit management services. With on ground resources all over India and support of the extensive communication program ‘ZZ’, we are best equipped to provide quick and cost effective solution to the problem of accounts management by way of debt collections. The idea is pretty simple – we focus on what we specialize in i.e. collections and thus ensure results!