debt collection agency

Here’s How You Can Reduce Debt and Avoid Collections

If there’s a call from collection agents, it’s all about reducing the debt. Besides, the COVID-19 pandemic has been hard on a lot of businesses and business owners. Consumers who have never been late with payments are also suddenly facing a pile of bills. However, there’s nothing to worry about. You can always connect with a debt collection agency. Besides, to avoid the account being sent to collections, it’s best to find ways to reduce the debt.

Here we’ll focus on how professional debt recovery services keep the debt in control.

Prioritize the bills

There’s no right way to prioritize which bills get to be paid. But, if you cannot pay all of the debts, it’s best to run a strategic payment plan. Things to keep in mind when prioritizing include,

  • Taxes are non-negotiable. You must make your problem worst should you fail to pay taxes
  • Payrolls aren’t negotiable, and you need to pay your employees
  • Debts with high interests rates or impending ballon payments make situations worse
  • Debts secured with collateral might make it impossible for you to run business
  • Debts secured with a personal guarantee leave you personally liable for the payment

Collect unpaid invoices

Cash flow issues may trigger a chain among businesses. Your business owes to others, and that firm, too, owes a third party. If others owe the money, it’s best to send them to collections. A professional debt recovery service provider will offer the best solution for seamless debt collection.

When you have a trained staff who can resolve the issue faster, you are now freed up to work on more promising accounts or projects. In addition, getting the money you are owed helps you reduce the debt and avoid being sent to collections yourself.

Consolidate

When you have different loans with varying interest rates, you must ask the lender to consolidate them into a lump sum and apply the lowest interest rate. You must ensure that the money you’ll save on the interest is more significant than your spending having the loan consolidated.

Speak to the vendors

A debtor must reach out to a vendor that owes money. A debt collection agency that was not open to negotiating a payment plan may feel differently now. If possible, it’s best to negotiate discounts, extended terms, or payment plans.

Most vendors and suppliers may actually have excess or aging inventory and are willing to offer good deals. Again, there’s no harm in asking, but you must be careful about how you ask. Obviously, you don’t want others to question your financial strengths and abilities to pay.

If the vendors begin to doubt the ability, they’ll send it to a debt collection agency.

Alternative funding

For interest-free financing, crowdsourcing and debt factoring are the best options. Most organizations utilize invoice factoring, where they sell the unpaid invoices to a third party. The factoring company pays a lump sum in advance, and the invoice is then paid to them by the customer. If under a financial bind, the factoring helps you provide immediate cash flow relief.

Besides, these companies take a charge that can be high. Factoring is not a loan if the company has no credit or poor credit. You may find funding through invoice factoring easier to achieve than a loan.

Conclusion

When you’re unable to reduce debt, it keeps upwinding with a collection agent. Here, the best option is to hire a trained team of collection experts. Interestingly, collection agencies work on a contingency basis. Therefore, it is in their best interest to work with them and get the payment cleared.

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