It's no secret that a recession is on the horizon. Many experts are predicting that it will hit sometime in 2023. While this may be cause for concern for some businesses, it's important to remember that not all recessions are created equally. Some are short and mild, while others can last for years and be quite severe.
So, what does this mean for businesses? Well, if the recession turns out to be short-lived, companies will want to build up cash to fund impending growth and come out of the recession strong relative to competitors. On the other hand, if the recession is more severe, companies will need to focus on conserving cash and preserving liquidity.
Why Non-Performing Receivables Are a Concern in a Recession
Debtors will reduce discretionary spending while trying to hold on to their wallets in a recessionary environment, which requires companies to adapt their approach on recovering non-performing debt. As more people become self-employed, collections should adapt to potential multiple sources of income and new forms of payment arrangements.
Another option is to find a third party to assist your business with its receivables management. From collections agencies to debt purchasers, companies need to assess their options on minimizing losses. It becomes more important than ever to establish viable options to monetize their receivables and maintain flexible capacity to weather the storm.
Don't Take Insolvencies for Granted
As the economy continues to be uncertain, insolvencies begin to rise. This can be a major problem for businesses as they struggle to file their claims on a timely basis, recover and monetize these accounts. In order to help companies navigate this difficult time, a processing partner can provide services that ensure a company's insolvency processes are successful.
Selling insolvent accounts can also be an opportunity for fast access to cash. A debt purchase partner can offer options to monetize on insolvencies and improve cash flow.
Either way, one thing is certain: companies need to maintain flexible capacity when dealing with non-performing receivables. This means having options and a strategy for debt recovery that can be quickly adapted to changing economic conditions.
The Wrap
Managing your receivables is an important part of business, just like other assets. It should be calculated and recorded properly, and it can sometimes be a difficult task to manage 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@canccede.com.
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