The manufacturing sector, in the United States alone, garners over $4 trillion in sales, contributing 12.8 percent of the overall GDP. As important and profitable as this sector is, manufacturing businesses — many of which are are small- to medium-sized companies — also constantly face risks as they deal with overdue receivables. Within the manufacturing field, it is not uncommon for businesses to feel forced to take on debts of their own simply to cover outstanding payments. In time, this fact can threaten the financial future of any manufacturer.
Developing an efficient debt collection strategy is, therefore, an essential part of any manufacturer’s continued success. How does the debt collection process work for manufacturing businesses?
Commercial Debt Collection: What Are the Options for Manufacturing Businesses?
Manufacturing businesses of any size are dealing with a double edged-sword when they take orders from clients who do not promptly pay outstanding debts. The longer a client is delinquent, the harder it becomes to recover the debt, the higher the risk that the client has such significant financial struggles that they will be forced to declare bankruptcy, and the more likely the manufacturer is to begin facing significant cash flow difficulties of their own. The manufacturing business is then left with three options. They can continue to pursue the company in order to recover their outstanding payment on their own, file a lawsuit, or decide to turn to a commercial debt collection agency.
Benefits of Working with a Commercial Debt Collection Agency
Since manufacturing businesses are nearly always going to have ongoing issues with outstanding payments, the most efficient and successful way to deal with receivables would be to partner with a reputable commercial debt collection agency. The best commercial debt collection agencies can assist manufacturing businesses in developing a debt collection strategy that does not put undue strain on existing business relationships, and therefore future revenue.
By outsourcing outstanding payments to commercial debt collectors, manufacturing businesses are able to focus on their area of expertise while improving the status of their receivables, as this delicate area is handled by professionals who are trained to handle debt recovery in a firm but diplomatic manner as a third party.
Furthermore, whenever debt collection for manufacturing businesses is handled by a professional commercial debt collection agency, this sends a clear message to the client that they need to take immediate steps to settle the debt. Commercial debt collections have a well-earned reputation for taking all legally-acceptable actions to recover debt, after all.
How Does Debt Collection for Manufacturing Businesses Work?
Commercial debt collection agencies — also known as business-to-business or “B2B” debt collection agencies — are ventures tasked with recovering debts owed by one commercial venture to another. They can put pressure on clients that have been delinquent in making payments through multiple different methods. These include certified formal demand letters and other communication with the debtor. Commercial debt collectors for manufacturing businesses may also, however, be able to negotiate a restructured payment plan with the debtor. This can allow manufacturing businesses to recover outstanding payments over time, in installments, or to avoid further losses by accepting a reduced payment when the debtor is facing bankruptcy. In some cases, a manufacturing business may be able to recover the goods sold to the delinquent client as well.
Over the course of their engagement, commercial debt collection agencies can work with the manufacturing business to ascertain the debtor’s credit and ability to pay the outstanding debt.
In working with a commercial debt collection agency, manufacturers can greatly reduce the number of outstanding payments, while not having to take on the frequently difficult task of managing debt collection on their own.