Not all Debtors are created equal!

27 Feb
After being in the ARM (accounts receivable management) industry now for many years, I can honestly say I’ve heard almost every story in the book from CEOs, CFOs, healthcare administrators, doctors, dentists, lawyers, accountants, billing managers to janitors as the reasoning or excuses from clients as to why their outstanding balance had not been paid.
Here are some common excuses:
  • They have been traveling.
  • They just lost their job.
  • They just moved and were not getting the invoices.
  • They came across financial hardships and needed some extra time.
  • They just had surgery and have been in the hospital so needed some time to get their things organized.
  • They weren’t satisfied with the service or product so didn’t feel the need to pay for it.
  • They were used to paying all their vendors after 60 or 90 days.
Here are some off-the-wall responses:
  • They said they were going to get their checkbook from their car and never returned.
  • They didn’t remember ever ordering that product or service.
  • They’re going through a divorce and to call the soon to be ex-spouse who is responsible for the balance, not them.
  • They were wondering if their creditor would be willing to barter instead.
It might seem odd to hear even the common excuses listed above if you aren’t in a business that extends credit or if you are in general a good paying consumer.
It may even seem like an episode from a spin off series of the Twilight Zone where customers walk into Costco, load their shopping carts full of items, walk past the cash registers, give the friendly greeters their mailing address to send them a bill and walk right out.  Luckily for Costco, it isn’t the case as they don’t extend credit (only through a 3rd party financing credit card partner).  Unfortunately for millions of other businesses around the world that essentially happens every day.
In my opinion the most vital thing to understand if you are in a business that extends credit or carries an accounts receivable is:
I explain to my clients that they’re only going to have to deal with 4 types of payers.  I laughed the other day when a client told me that 4 payers is 3 more than he’d care to deal with.  Can you blame him?
Here are the 4 Payer Types:
  1. Dutiful  (Always pays their bills on time, probably has an 800 or higher credit score.)
  2. Distracted (That busy working professional who is good for the money but hasn’t yet gotten to all 10-12 monthly bills on their kitchen table.  They simply need a reminder text, email, phone call, letter and they’ll pay up.)
  3. Disrespectful (Has disregarded and ignored at least 2 billing cycles from the same creditor and hasn’t called to explain or apologize about non-payment.  Are paying some bills more timely, but they have chosen which bills to put off that don’t seem so urgent.)
  4. Deliberate (Have expressed to their creditor verbally that they will not pay the balance owed or expressed through non verbal cues of long periods of silence, mail returns and disconnected phone lines.  These are the most high risk debtors.)
Now be honest with yourself, which category do you fall under?
I want to note that, in my experience, these 4 payers types are found in all socio-economic income levels, meaning some wealthy people fall into the category of Deliberate high risk debtors while people from low income levels can be in the category of Dutiful payers.
I won’t get to into details about the psychology of why these 4 types of payers/debtors respond, react or do nothing in this article.  What I can tell you is by simply understanding that there are 4 payer types and that not all debtors are created equal puts you FAR ahead of the game and your competition.
The BILLION DOLLAR question is how do I efficiently and professionally address each of the 4 payer types to recover my past due balances? (That is if you’re in a business that extends credit, if you don’t have to worry about this then lucky you!!)
I would love to hear your comments, create some dialogue around the 4 payer types and hear your ideas on how your business effectively maximizes your accounts receivable in-house.

7 Things a CPA Needs to Consider when Deciding on a Cost Segregation Partner

21 Feb

Including cost segregation into your CPA practice will benefit you and your clients by expanding your business and offering a service requested by many. It is important to know a few things about your potential cost segregation partner. When looking into firms that specialize in cost segregation, you’ll want to make sure they meet a few requirements before you partner with them. You want them to become an asset to your firm. Below, you’ll find a list of questions that you should ask each cost segregation firm before you commit to anything.

  1. Is the cost segregation firm you are considering an expert in the tangible property regulations? Whether your firm has become highly or only partially educated on the Repair Regulations, your cost segregation partner should be able to calculate complex issues for all of your clients who qualify. When a cost segregation firm is an expert in the repair regulations, they will quickly be able to step in as your calculation experts offering immense savings to your clients and potential consulting fees to your firm.
  2. How long have you been in business and how many cost segregation studies has your firm done? It’s good to know the firm’s history and experience in the industry. You need to know that they will be there for your client if an audit occurs.
  3. Who is performing the study? A cost segregation study is a technical process that requires knowledge in both construction and engineering. It’s important to find a firm that performs every facet of the work in-house that goes into the cost segregation.methodsOfAStudy
  4. What method does the firm use to perform the cost segregation study? There are several methods that a firm can use to perform a study but not all are created equal. You want to make sure the firm you choose uses an engineering approach to reduce the risk in the event of an audit.
  5. Does the firm provide a complete report? The study needs to offer the preferred 13-point conclusion. It is important to establish that a report will be made and given to both the tax professional and the client when the study is complete. See U.S. Tax Code Guidelines.
  6. In the event of an audit, who will defend the work? This is important for your client’s peace of mind because they’ll know they won’t have to face an audit by themselves and that the firm will defend its study.
  7. Ask for references. As with any important relationship, references will give you the peace of mind knowing that your cost segregation partner provides on time, accurate, and bullet-proof results.

Expanding your services is an important matter. As a professional, you want to maintain the same level of quality your firm has provided for years when adding another service that includes bringing in outside help. These questions will help ensure you find a cost segregation firm that meets your standards and provides a quality service to the customers that trust you.

For more information or a no-cost property analysis, call me at 888-780-1333


About CSSI


In 10 years, we have completed thousands of CSSI Studies. Our CSSI Studies have been performed for commercial property owners in every state of the U.S. CSSI representatives bring the personal and professional attention that every commercial property owner and their CPA needs to assure the proper engineer-based cost segregation result, according to the U.S. tax code rules.


About Cash Flow Strategies, Inc.

CashFlow_logo big

Cash Flow Strategies, a natonal partner with CSSI, is a one-stop shop for businesses and medical/dental practices looking to boost cash flow.  Providing a wide range of services to increase revenue, lower expenses, and cut taxes, Cash Flow Strategies provides a no-cost and no-obligations “Cash Flow Checkup” which will outline potential strategies to maximize cash flow


First-Party vs. Third-Party Accounts Receivable

30 Nov

You know that understanding the details of how your accounts receivable department works is vital to the long-term success of your business. Without diligent attention, it can become one of the biggest financial headaches within your company.

Accounts receivable can be handled in one of two ways: first-party and third-party management. This may seem self-explanatory; first-party means your company manages AR in-house, while third-party means you’ve outsourced to an outside company. This is true on the surface, but there is a secondary way to look at the issue. First-party accounts receivable management can also mean that a separate company handles your AR.

To understand how this is possible, it’s important to look at the process of collecting on outstanding accounts, and at which stage first- and third-party management are best utilized.


Identifying Which Collection Strategy Is Best For You

In the business world, it is inevitable that some of your customers will fail to settle their account in a timely manner. Some may need a gentle reminder or two, while others may need to implement a repayment plan to meet their obligation. Others will simply not pay at all. You know that the longer your company goes without recouping those funds, the harder it is for your cash flow to remain healthy.

If your company is looking for a streamlined approach to collecting on overdue accounts, you can enlist the help of an outside company to handle both first-party and third-party management.


Early Stages – First-Party Management

When the account is only slightly overdue, first-party management is recommended. This is when all communication with the customer appears to come directly from your company, even if a separate company is handling it. First-party management is about trying to cure an account or prevent a loss, so early intervention is crucial. The treatment of accounts worked first-party and in a pre-charge off situation, is often the same.

At TSI, our goal is to become an extension of your back-end operations, streamlining the first-party collection process for you. Your branding and communication guidelines are strictly followed. Reminder letters and calls are common during this stage. We strive to maintain a relationship with the customer and help everybody reach a workable solution.


Later Stages – Third-Party Management

The decision to move to third-party management is usually due to the failure of a customer to respond to earlier messages. People commonly refer to this stage as ‘being in collections;’ communications are now coming directly from a separate company. The third-party is still acting on behalf of your business. Post-charge off work would also fall under this stage.

With third-party management, other tactics can now be used to locate the customer and bring the account up-to-date, aiming to instill a sense of urgency in the debtor. Third-party management is often more regulated than first-party and is always covered under the FDCPA (Fair Debt Collection Practices Act).

Ultimately, third-party management is about liquidating the total balance written off, and TSI can help. Our diplomatic process is designed to maintain a positive relationship with the customer while encouraging them to settle their account quickly. We utilize our proprietary data analytics platform and collection tactics including skip tracing, credit bureau reporting, and bankruptcy monitoring to increase your liquidity rates and develop more accurate revenue forecasting.

But the real value of our operations is in our people. You can rely on our seasoned collection experts to work diligently on your behalf, backed by extensive training and support.


Reach Your Goals With A Trusted Partner

Working together with a partner from the early stages can benefit both you and your customers. It allows the partner to become familiar with an account in receivables right from the beginning, so they can better judge if and when to move an account from first-party to third-party status.

It also relieves the burden from your in-house staff of having to chase down overdue accounts. Your team can focus on other areas of the company to keep operations running smoothly, knowing that a trusted partner is acting on your behalf to bring your accounts receivables up to date.

Finally, you can develop a customized approach to give your customers an integrated experience, which could result in a higher percentage of accounts being settled during the early stages.

TSI is committed to providing personalized services to your customers, maintaining and enhancing relationships while helping you recoup lost revenue. Our integrated collections platform combines best-in-class technologies with data-driven workflows to facilitate effective and compliant operations for our clients. Contact me today to explore your options.

Source: TSI

Cyber Security and Debt Collection

20 Nov

Did you know that employees account for 43 percent of data loss, whether intentional or accidental? The remaining data breaches occur because of criminal infiltration. Regardless of the threat, our research shows that data loss and security breaches cost companies an average of $4 million in 2016, during which more than four billion pieces of confidential data were exposed.

Unfortunately, failing to create an effective cyber security system for your data collection efforts could put your customers and your company at risk.

Risks Associated With Cyber Security and Debt Collection

Data is easier to steal than you think.

Debt collection records are particularly sensitive because they contain significant financial information. The sensitivity elevates if you’re in the healthcare industry because your data might include personal health information (PHI).

Since you must report data breaches, your company’s reputation can take a serious hit if your customers’ data becomes compromised. Additionally, you could face serious consequences with regard to your cash flow, accounts receivable management, and stakeholders.

A data breach involving debt collection records could result in a serious fine from a regulatory body. Back in 2012, for instance, an auto dealership and a debt collector had to reach a settlement with the Federal Trade Commission (FTC) over data breaches that took place because of peer-to-peer file sharing.

Unfortunately, data breaches are on the rise. Our research reveals that 2016 saw nearly 40 percent more data breaches than 2015, and 94 of those breaches exposed at least a million confidential records each. Consumers value their privacy. In 2016, more than 15 million American consumers suffered from some sort of identity theft.

Cyber Security Solutions for Debt Collection

Getting best-in-class security for your data can help prevent breaches and other cyber security issues.

Many businesses don’t have the infrastructure necessary to meet HIPAA, NIST, FISMA, and PCI-DSS guidelines. That’s why working with a well-equipped collection agency can become a major asset.

Established collection agencies that secure their data against breaches can help protect your company from lawsuits, fines, reputation hits, and other consequences of a data breach. When you’re looking for a collection agency to handle your accounts receivable, make sure the candidate you choose follows these guidelines:

  • Data protection for data while it’s at rest, in processing, and in transit
  • Secure data center with 100 percent uptime
  • Redundancies in place to preserve data
  • Employees who are experts in specific data security areas, such as HIPAA, depending on your industry

Furthermore, you want to work with a debt collection agency that views security as a priority. As hackers and other criminals find new ways to skim data from victims, debt collectors must keep up with those attempts and find new ways to prevent intrusion.

You also want to make sure that your data is physically safe. Data centers should be equipped to prevent physical intrusion, fire and flood damage, and other catastrophes.

At TSI, our service portfolio is compliant with NIST, FISMA, PCI-DSS, and HIPAA. We employ security specialists with years of experience and expertise in protecting data against loss and corruption. If you’re looking for a debt collection agency to not only promote healthy cash flow and collect outstanding payments but also to preserve your data, we’re here for you. Contact me now to start optimizing your revenue.


Save Money and Go Green, Without Spending a Dime

13 Nov

If you own a commercial building, or are responsible for the lighting bill for a commercial property that you lease, there is a quick, certain way for you to save money, build cash flow, reduce lighting bills by up to 60% and be more environmentally responsible without having to spend a dime out-of-pocket.  It is the “no-brainer” of the century!

The transition to low-cost, highly efficient, LED lighting is catching on like wildfire.  Some have avoided the discussion because of the high initial cost of retrofitting a building or office with this clean energy technology.  Now, there is no reason to wait, because we can now provide “Lighting As A Service” (LaaS) that requires NO money out of pocket to accomplish.

Your entire building can be retro-fitted with state of the art LED lighting, which will also be installed and maintained, for a share of the cost savings in electricity over the life of the contract.  You can simply enjoy the additional cash flow and bottom line energy savings.  At the end of the contract, you can either have the lighting updated to the newest most efficient lighting, extending the LaaS agreement, or you walk away as the proud owner of a fully energy-efficient lighting system for your building.

  • No money out of pocket
  • Huge energy savings
  • No maintenance costs
  • Complete turn-key solution
  • Immediate cash flow and profits from the very first month

The move to energy efficient, inexpensive, LED lighting is underway.  LED’s are available in every style, brightness, and color temperature.  It can be made to look anywhere from soft candlelight to bright flood and spot lights.

One client, a large hospital system, received a $1.8 million dollar retrofit with no money out of pocket and was able to retain 40% of their energy savings, or $2.2 million over 5 years.  At the end of the 5 year contract, they will retain 100% of the energy savings.  The project reduced 60% of their energy use from previous fluorescent and incandescent lights.  These savings also didn’t include reduced maintenance costs as well as HVAC energy cost from lowered room temperature due to less heat dissipation from LED lights.

No matter the size of your business or your building, you can benefit in similar ways by taking advantage of this new way to boost your cash flow.   Contact me to see how much additional cash flow you can expect.

Finding Debt Assistance

6 Nov

TSI | Date :- November 3, 2017

There are times when even the most conscientious consumer may find they need debt assistance. The first thing to understand is that there is no shame in this. Occasionally, people need help finding out what their options are and how to best go about handling any issues that might have cropped up. The world is uncertain, so it is good to know that there are people out there that can help you get back on track.


Types of Debt Assistance

It is important to keep in mind that not all debt assistance may be the same. Typically, there are a number of different types of agencies that you may find yourself going to, each may have their own approaches to the way that debt can be made more manageable. Here are just a few of the options you have when looking for ways to repay a debt.

Credit Counseling –This system is usually focused entirely on the debtor, helping them develop budgets, pointing them at educational materials and workshops, and generally guiding people toward making the life changes that they may need to in order to meet their obligations. Usually, after an initial session, there may be the need for follow up sessions to help you keep on track.

Debt Consolidation – Debt consolidation involves taking out a loan to pay off smaller loans or debts. Sometimes this takes the form of balance transfers onto a new credit card with a 0% or lower APR. Another version of debt consolidation would be to take out a home equity line of credit and use that loan to pay off your others. Debt consolidation can help consumers roll multiple payments into one, typically at a lower interest rate or for a lower monthly payment making their debt a little more manageable.

Working directly with the collection agency or companies you owe – A number of agencies like TSI (Transworld Systems Inc.), are there to provide assistance for people that do not know who they should talk to about setting up payments, paying off a debt that is owed, or requesting information about their debt. This may be a good way to start looking for solutions when faced with collection letters or calls. Most collection agencies are willing to work with you to find repayment options that work for you if you keep the lines of communication open.


Getting the Right Counselors

No matter what option you choose when looking for debt assistance, make sure to ask lots of questions.  At TSI, our representatives are trained to provide knowledgeable consumer assistance and want to help in any way we can.

We understand that debt can be crushing for anybody and may cause incredible amounts of stress for a person and their family. That is why it may be a good idea, if you are struggling with debt, to look at your options for debt assistance from TSI.

Contact me directly at 770-224-8504 or email me for more information

Statistics That Will Shake Up Your Accounts Receivable

31 Oct

If you sell products or services on credit, then chances are that the words “accounts receivable” are enough to give you a headache.

Nevertheless, successfully managing your collections department is critical to your growth as a business. Recent numbers suggest that uncollected receivables could cost your company into the hundreds of thousands of dollars. Plus, surveys show that most businesses aren’t that great at staying on top of them.

Let’s take a closer look at how much your collections are costing your business, and what you can do to fix it.

Numbers Don’t Lie

Figures from Inside Account Receivables Management clearly illustrate how receivables lose significant value over time. By the time they are 90 days overdue or more, they could be worth only 20% of their original value:

Not only is value lost on the money owed, but overburdened AR departments can cost your company in other ways. Increased workload, reduced productivity and resorting to bank debt to maintain cash flow are all symptoms of poor collections practices.

A payment practices study in 2016 proving that even though it’s costing them money, many American companies have room for improvement when managing their collections:

  • On average, companies write off 1.5% of their receivables as bad debt.
  • 93% of businesses experience late payments from customers.
  • 47% of credit sales are paid late.
  • Average payment terms are 27 days, but actual payment period averages 34 days.
  • Survey participants see maintaining cash flow levels as a key challenge that is critical to business profitability.


Clearly, your accounts receivables could be costing your business a sizeable sum. However, there are a few best practices that you can implement today that will help to tighten up your collections department and allow you to put money back into your business.

Do The Math

The first step is to calculate your average collection period. This will give you a clear idea of the number of days on average it takes for your business to see receivables turn into cash.

very informative post on The Balance outlines exactly how to perform this calculation. It requires some basic financial information about your business:

Days in Period x Average Accounts Receivable / Net Credit Sales = Average Days to Collection

Let’s break that formula down to its basic elements:

Days in Period — This can vary; it could be 365 days or 90 days; whatever works best within your business. The key is that however long this period is, all other parts of the formula must span the same number of days.

Average Accounts Receivable — Using the period of time established above, total the accounts receivable both at the beginning and at the end of the period. Then divide it by 2.

Net Credit Sales — This is the total of your gross sales minus the total of all returns during the set period.

For example, Company XYZ sees that their outstanding account receivables sit at $30,000 at the beginning of the year. By the end of the same year, they have risen to $36,000. Net credit sales came to $100,000 by the end of the year.

Using this example, the formula looks like this:

365 x 33,000 / 100,000 = 120.45

According to the math, it takes an average of 120 days for Company XYZ to see their account receivables resolved and translated into all-important cash flow.

Next Steps

Now that you have an idea of how long it takes credit customers to pay you, you can implement strategies to improve. For instance:

  • Narrow your credit requirements to cut down on credit-consumers
  • Train staff to clearly illustrate credit payment policies
  • Be prepared to enforce your credit policies
  • Incentivize early payment
  • Consider enlisting outside help to manage accounts receivable

We are dedicated to helping companies collect their accounts receivable while maintaining customer service excellence. Our years of experience can help you streamline the process of debt collection, now and for the future, while optimizing cash flow and increasing productivity in all areas of your business. Contact me today to learn more.

Source: TSI

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