News at Griffin and Associates LLC

9/22/2008 - Collectability of Delinquent Account.........Assign your files early....

Collectability of Delinquent Debts At Time Intervals After The Due Date

Cash flow is the fuel in the engine that drives businesses large and small. Delinquent accounts are the brakes that bring companies to a screeching halt to even file bankruptcy. The economic of recent years has pushed many companies to extend the time they will pemit an accounts receivable to age prior to sending it in for collections. Times have changed and allowing your customers to pay later rather than early may be severely impacting your companies' cash flow and bottom line.

The probability of full collection on a delinquent account drops dramatically with the length of delinquency. These are the chances you take on each account:

On the Due date: 94.9 % chance.

30 days past due: 89.9 % chance.

60 days past due: 81.3 % chance.

90 days past due: 69.6 % chance.

six months: 52.1 % chance.

nine months: 39.1 % chance

one years: 22.8 % chance.

two years: 9.3 % chance.

For example, even after only three months, the probability of collecting a delinquent account drops to 69.6 % After six months, collectability drops to 52.1 % and after one year, the probability of ever collecting a delinquent account drops to 22.8 %

The results of this survey clearly demonstrates the crucial importance of taking an immediate action when an account receivable ages past its due date. In today's competitive market it is required to keep up with economy. Companies that maintain a constant cash flow by collecting their past due accounts early, can have the ability to adapt to constant changes of the market conditions. This is true whether you are in the advertising industry or a company in the Silicon Valley. If your company permits the delinquent accounts to age, chaos can strike on a company's liquidity and use up your employee's time that could be spent on more productive matters. Companies must take a firm stance on past due receivables, and turn to professional help to get that "third party impact" when their own efforts have not been successful.

Remember, allowing a delinquent account to age like fine wine will only allow other creditors to "beat you to the punch" and get paid first, and with the total number of bankruptcies filed during the first 3 months of 2008 which increased by 26.9 % over the same period in 2007, according to data released June 3, 2008, by the Administrative Office of the U.S. Courts, Now is the time to act.