Recently I reviewed an article referencing data from The Commercial Collection Agency Association regarding the likelihood of repayment by time interval. As may be expected, the highest likelihood of repayment occurs either at the due date or within the first 30-days following the due date, 98.2% and 93.1%, respectively. After this period, the percentages decline rapidly to 85.4% at 60-days, 73.1% at 90-days, and so on. A company can combat the risk of non-payment by employing the use of a credit application for new customers, checking credit information through sources such as Dun & Bradstreet, and, of course, following-up with customers regularly to ensure the receipt of payment. However, for most small and medium-sized companies, the aforementioned tasks can sometimes be too time consuming and can take valuable resources away from the company’s core objective.
Commercial factors provide a unique service to companies where, in addition to providing needed cash flow on frozen receivables, the due diligence performed by the factor can decrease Days Sales Outstanding and improve the quality of a company’s receivables. Factors typically perform research on all receivables purchased. Factors research the business of each receivable purchased through various credit reports as well as working with the Client and its customers to ensure that the invoice is agreed upon and payable through a process called verification. These procedures usually result in positive results for the Client in that their customer-base strengthens and their Days Sales Outstanding decreases by virtue of these processes.
RMP Capital Corp prides itself on delivering this service to its Clients. From researching the customer base, to working with the Client to ensure the collectability of the receivables, RMP Capital Corp provides a value-added service every day. RMP Capital Corp even offers to work with its Clients to either create or improve their credit applications for new customers. RMP Capital Corp has been able to improve each Client’s Days Sales Outstanding and provide a win-win scenario for its Client.
Obviously, in this economy, nobody wants to turn away business; however the desire to increase sales does need to be met with prudence in evaluating the repayment ability of the increased sales. The general rule is that for each credit loss which a firm experiences, it takes 10 more deals of the same size to erase the loss. Let RMP Capital Corp help your business to reduce its Days Sales Outstanding, increase the strength of its customer base, and allow your company to focus on other matters, leaving RMP Capital Corp to help you with the Credit evaluation and collections efforts – its’ a win-win relationship.