If you have been keeping up to date with the recent economic news, this might not come as a surprise for you: Canada is already experiencing recession-like conditions.
An increasing number of consumers are struggling with the cost of living and having a challenging time paying their bills, which is in turn, driving an increase in delinquent receivables for businesses. This is where debt buyers can step in and help alleviate some of the impacts of the recession.
Recovery expectations reduced
Rising costs and the fear of a full recession have consumers concerned. We are seeing an early trend of consumers defaulting on loans and other bills. Without consumer stimulus from the government, as was seen during the pandemic, companies are going to face an increase in the number of non-performing accounts. Collecting on receivables will become more difficult and companies will need to reduce their expected recovery.
Cash is king
In a recession, access to cash can help speed up a business’s recovery. Paying salaries and overhead to collect non-performing receivables is a drain on your resources. Selling your debt in exchange for immediate cash makes your business more flexible and more resilient to prolonged down turns in the economy.
Move swiftly
With interest rates rising and more debts being sold, the market price for your accounts will be negatively affected. Rising interest rates also push up debt buyers’ cost of funds, and this affects the prices they can offer.
As a recession deepens, the supply of non-performing accounts will start to accelerate, outstripping the demand for those accounts. And as a result, the price debt sellers will receive will be depressed. Getting debt to the market sooner can improve the price a seller receives.
Experience counts
With the economy teetering on the verge of a recession, now is not the time to take risks with inexperienced counterparties. Look for an experienced debt buyer who can not only offer you a fair price but also provide a customer-centric approach that will protect your reputation and safeguard customers’ experience.
The Wrap
With interest rates rising and the economy fast approaching a recession, businesses need to shore up their resources. As consumers struggle to pay their bills, businesses are going to find more accounts becoming non-performing. Rather than using internal resources to attempt to capture hard-to-realize collections, businesses can turn those accounts into cash by selling them to an experienced receivables management team that can provide a customer-centric approach while protecting your reputation.
Managing your receivables is an important part of business, just like other assets. Receivables should be managed properly, and it can sometimes be a difficult task to do so internally. Outsourcing your debt recovery can offer some smart and timely alternatives. Canaccede Financial Group is the largest multi-asset acquirer in Canada. We provide both debt servicing and purchasing solutions. Our expert valuation team can work with you to size the debt recovery potential for your organization. If you, or someone on your team, would like to find out more, please contact us at partnerships@canaccede.com.
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