Maintaining Customer Relationships Creates a Tricky Proposition for Businesses Collecting Outstanding Debt
Could the desire to maintain strong customer relationships hinder a business’s need to collect outstanding debt? There are many factors businesses weigh when dealing with such delicate matters.
Breaking down the complex world of debt collection, an article from IC System reveals a critical yet challenging aspect of business finance. It emphasizes the vital role of debt collection in bolstering cash flow and profitability, while cautioning against risks such as damaged customer relationships, legal entanglements, and high costs. With clear policies, proactive communication, and ethical practices combined with careful management, the rewards of debt collection can significantly outweigh its potential pitfalls.
Still, are the fears of damaging customer relationships and facing legal challenges the primary reasons businesses hesitate to pursue outstanding debts?
Mfon Akpan, CGMA, Assistant Professor of Accounting at Methodist University, highlights the critical balance businesses must strike between financial recovery and customer goodwill. “There might be some ethical and legal concerns around collecting outstanding debt that the business may be concerned about having to mitigate,” Akpan Says.