Why Acting Quickly on Overdue Invoices Matters
Promptly sending overdue invoices to collections is crucial for businesses aiming to maintain healthy cash flow and maximize debt recovery. Delaying this process can significantly diminish the likelihood of collecting outstanding debts.
The Probability of Collecting Overdue Invoices Drops Over Time
According to data from the Commercial Collection Agencies of America, the probability of collecting a delinquent account decreases sharply over time:
- After 3 months: The likelihood of full collection drops to 68.9%.
- After 6 months: It further decreases to 51.3%.
- After 1 year: The probability of collecting the debt plummets to 21.4%.
These statistics underscore the importance of acting swiftly when accounts become overdue. The longer a debt remains unpaid, the less likely it is that the full amount will be recovered. (nacmcommercialservices.org)
Delays in Collections Hurt Recovery Rates
A report by the Consumer Financial Protection Bureau (CFPB) highlights that the total number of collections tradelines on credit reports declined by 33% from 2018 to 2022. This trend suggests that fewer debts are being reported to credit agencies, potentially due to businesses delaying the collections process. The longer businesses wait, the harder it becomes to recover what is owed. (consumerfinance.gov)
Timely Collections in Healthcare: A Case Study
In the healthcare sector, acting quickly on overdue invoices is especially critical. A 2017 poll by the Medical Group Management Association found that:
- 43% of healthcare providers wait 91-120 days before sending an account to collections.
- 32% wait more than 120 days, significantly reducing their chances of full recovery.
This delay not only leads to decreased recovery rates but also puts financial strain on medical practices. (college.acaai.org)
The Bottom Line: Take Swift Action
By promptly placing overdue invoices into collections, businesses can improve their chances of recovering debts and maintaining financial stability. Implementing a proactive collections strategy not only enhances cash flow but also reduces the risk of accumulating bad debt.
If you’re facing challenges with overdue invoices, consider contacting us to assist in the recovery process. Taking swift action can make a significant difference in your business’s financial health.
