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If you’re seeking a loan to expand your business, potential lenders will look at your accounts receivable management. The amount or percentage of your uncollected debts makes a difference in whether you obtain a loan on the terms you want.  Knowing the information below might help you position your enterprise as a better loan prospect and improve its cash flow.  

How Do Unpaid Invoices Slow Cash Flow?

When your business carries unpaid invoices, they are reported as accounts receivable. If you don’t collect them, you lose money owed for goods or services you have provided. Additionally, late-paying or nonpaying customers or clients slow your business’s cash flow. Eventually, you report or write off the uncollected debt as a bad debt expense.    

Why Does Bad Debt Matter?

accounts receivable managementNonpaying customers eat into your revenue and net profit. Lenders see bad debt write-offs and unpaid invoices as signs of poor accounts receivable management and factor those circumstances into their loan-making decisions.

How Do You Deal With Bad Debt?

Hiring a commercial collection agency is an effective way to deal with bad debt. Assigning your debt collection tasks to an experienced agency enables you to recover what is owed and reduces your bad debt expense reporting and write-offs. With an efficient accounts receivable management system, you collect the money you have earned, and the business becomes a more attractive credit risk to prospective lenders.   

 

Carrying bad debt can ruin opportunities for getting business loans. The debt collection professionals at Joseph, Mann & Creed in Twinsburg, OH, offer almost 20 years of experience of reducing bad debt and enhancing accounts receivable management for businesses of all sizes nationwide. The firm’s founders have 65 years of collective experience in the third-party collection industry. Visit their website today to learn more about their services, and call (216) 831-5626 to schedule an appointment. Visit their LinkedIn page for late-breaking business news.

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