Selling your distressed accounts and insolvencies in separate individual sales may be leaving money on the table. Taking these asset classes to market as a bundle optimizes those debts for the seller.
Because many companies operate their charged-off and insolvent assets with different internal or external teams, they are often not thought of as a collective opportunity. By putting their value together, there is a significant opportunity to create larger sale value and operational savings.
Bundle asset classes
Some receivable management companies are adept at purchasing and servicing both insolvent and charged-off debts as a bundle. When bundled, the seller benefits from economies of scale on a bigger sale and servicing opportunity for the buyer. Simply put, the larger the deal of multiple asset classes, the better the buyer’s ability to blend margins and optimize the overall price for the seller.
With your bundled sale, a buyer with capabilities across multiple asset classes can leverage resources to ensure the assets are serviced optimally and pass on the benefits of an efficient cost structure to the seller.
Single point of contact
Finding a debt buyer for both your insolvencies and distressed accounts allows you to have one single contract point for an easy flow of assets from charged-off to insolvent status. This transparent collaborative relationship often allows for an improved value creation for your bottom line. Also, by establishing a forward-flow arrangement on the charged-off and insolvent debts, a debt buyer can work with the seller to ensure predictable cash infusions across the multiple lines of business.
Contracting with one buyer covering multiple asset classes, reduces time-consuming negotiations for each asset, ending up with different requirements and arrangements. Selling your distressed and insolvent accounts separately to different buyers means you are dealing with multiple systems and touch points, consuming your time and resources. Having all your sold files with one source offers a strategic win for the seller by simplifying their internal processes.
Increased scope of service
For instance, along with buying charged-off debt, a buyer that also purchases and manages insolvencies will be able to provide comprehensive insolvency processing services fully managed by them. Services that you can expect in this kind of sale structure would include a quality servicer reviewing creditor packages and supporting documentation, preparing, and filing proofs of claim, voting, the management of all correspondence, documentation, dividend follow-up with trustees. Removing these tasks from a seller’s internal team and getting an increased price for all assets truly allows a seller to redeploy their human capital for much higher value tasks.
So, next time you are trying to find inventive ways to drive accretive value in a unique and efficient manner, consider looking at all of your delinquent assets and think of them as a collective opportunity to create an immediate cash-infusion benefit, operational efficiency improvement and something that can be executed month after month, thus allowing for more predictive and financial liquidity for the assets over the long-run.
The Wrap
Managing receivables is an important part of the effective management of your business. Like your other assets, they should be calculated and managed to provide as much value as possible to your enterprise. This is often a difficult task to effectively manage internally, frequently with limited resources.
At Canaccede Financial Group, we help highlight where outsourcing your debt recovery can offer some smart and cash accretive alternatives. CFG is the largest multi-asset acquirer in Canada, and we provide both debt servicing and purchasing solutions. Whether you’re looking to optimize your insolvencies or charged-off assets, our expert valuation team can work with you to evaluate the debt recovery potential for your organization. If you, or someone on your team would like to find out more, please contact us a partnerships@canaccede.com .
To find out more about CFG and how we can help, click here.
