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Friday, May 6, 2011

5 Things to Know For Small Business Collections

Fort Thomas has a lot of small business owners.  I'm not talking necessarily about small mom and pop retail business owners but a lot of sole proprietors working out of their homes or with small operations with a few employees with offices around Northern Kentucky.

Kevin Welsch, Owner and CSO of Cipher Recovery is a great example of such a Fort Thomas resident.  Not only does he run one of these businesses but he also provides services to these small business owners that keep them out of trouble with cash flow concerns.  Kevin answers this week's '5 Questions' regarding small business to small business collections.

1. Why is it important to have a good partner in collections as a small business owner?  In January 2010 (around the time the economy began to recover from a steep recession) there were 900 businesses going out of business each day.  Those 900 businesses each day represent a lot of credit that suppliers were left holding and may never be recovered without the help of a service like Cipher Recovery.

Also, unlike consumer collections it is easy for a business with an LLC or sole proprietorship organization can easily dissolve the company and stay out of reach of creditors.

2. Are there any services that allow businesses to gauge collections risk prior to extending credit that do not require a credit check? - Cipher has a service called Talon that does just that.  TALON is a free and confidential proprietary software program that helps finance professionals from every industry analyze the integrity of any customer’s credit. The TALON system is an alternative to expensive credit reports that are issued by most agencies. The difference is that TALON is updated daily to provide you with the most recent information on how your client is paying other creditors. TALON can help in-house collection efforts by alleviating any concerns about a client's ability to pay. It can also help in planning the next step in the collection process by finding out that the client not only owes you money but owes multiple creditors. 

3. Is a collections agency too involved for a small business with only a few credit accounts?  Cipher can provide collections on a contingency fee basis.  This is a risk free approach to protect the bottom line.  You can place any account for collection regardless of age and/or nature. Implementing a contingency based strategy doesn't mean your account will be pushed aside.  Instead, Cipher treats every account with a sense of urgency and as a top priority.  Partnering with Cipher Recovery Services LLC, means your collection account will be handled – personally – by a highly qualified staff with a vested interest in your success.  Cipher recruits top-ranking collectors from across the country with a proven successful track record.  Cipher further compliments their collectors' professional development through a comprehensive training program. 

4. What approach to collections seem to be the most effective?  Almost every business has utilized the legal expertise of an attorney for at least one facet of their company. Whether you hire an attorney for a legal agreement/contract, real estate, or just for advice, you try to make sure that they specialize in that field. However, even attorneys will tell you that the legal process doesn't always guarantee you a payment. In order to capitalize on time management, many attorneys utilize Cipher Recovery to determine if the debtor is even worth the time that will be consumed by the legal process. We will never throw good money after bad money. Cipher conducts an extensive asset and liability investigation on all accounts placed for collections. With the help of our national network of on-site private investigators if we determine that your debtor is unwilling to pay we can then proceed to contact their bank, property manager, nearby business, as well as other vendors and suppliers, secretary of state and county tax assessors office

5Does using Cipher Recovery give their clients a bad name in their respective industries? No not at all. Some of our clients are worried about this very thing and firstly, that’s why we can customize our approach to going after debt. Secondly, let’s face it, no debtor is going to call other business in their industry and say “I’m not paying my bills and I got placed for collections. Can you believe that?” Chances are the debtor is having troubles with more than one supplier and most people in their respective industries know this already. More often than not we can preserve the relationship between our clients and their debtors so a business relationship can continue. And as a side not, a lot of the debtors we contact become our clients because they like how we dealt with them.

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