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Financial Solutions
12 Jun 2017

What could your business do with some extra money?

Convert debt on your books into cash in the bank

It’s a fact of life that sometimes customers don’t pay on time. Not even after a couple of reminders. Or a debt collection demand. Taking care of your own invoicing and collection means you have to carry that debt, and the risk of never getting paid.

Every company I work with knows that they face the risk of customers who won’t or can’t pay. Some companies use payment providers, who take on the risk from the moment of purchase, while others refer their non-performing debts to a collection agency, which takes over the debt (but not the risk).

But many choose to handle their own invoicing and debt collection. That keeps debt on their books, harming their cash flow and tying up time and resources. Selling that overdue debt to a company like Arvato transforms it into cash. So what do you need to consider?

When to sell your debt
Some companies sell their debt after it has already been in debt collection for some time. In this case, we usually buy a portfolio of debt of a particular age: perhaps 60 days after due date, or 100 days, a year or even more. Many of my clients start this way, and benefit from turning these old debts into cash. But the older debt is harder to recover, and so it gets a lower price. Put simply, the fresher the debt, the better.

The other main approach, and the best solution for most companies, is to sell your debt on a continuous basis, as soon as it passes the due date. That ensures a higher pay-out, greatly simplified administration and predictable cash flow every month.

Tax advantages
Selling your non-performing debt can also have a beneficial effect on your tax liability, in comparison with referring them to collection. That can make a big difference, particularly with larger volumes.

Efficiency and cost
It can feel natural to take care of your own invoicing and debt collection when your company starts out – they are your customers after all. But as your sales volumes grow, those aspects take more time, money and effort that you could be spending on your business. It is important to look at the cost and efficiency of your current system, and see how and where you can improve things. Our specialist expertise and economies of scale mean we can deliver better results at lower cost.

Looking after your customers
And even if your customers are having problems, you want to make sure they are handled properly. So if you sell your debt, is there a risk that the new creditor will squeeze your customers dry to get the money? We see your customers as a priority, so we do everything we can to help them resolve their debt problems and remain loyal – and profitable.

Every time I discuss debt purchase with a client, we discuss these questions and others to get the complete picture: what volume of debt you are carrying, how many debtors, special circumstances and requirements, your current costs and solution rate – and not least, what you could do with all that extra cash.  😊

Pelle Källman,

– Sales Manager Sweden, Arvato Financial Solutions


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