Use a Third Party Before Year's End

After Reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.


At the end of the year it is even more important to leverage this assistance for more than just the recovery.

Even with the best profit recovery company, getting more than 50% after 90 days of aging via written demands is an excellent recovery! For verbal demands to bring in another 20% after 130 days of aging would also be excellent! What this means is that the other 30% best case goes unrecovered! Businesses typically have no choice but to write this debt off.

What "writing it off" really means is to take a positive tax situation for it with the US federal government's IRS department. However, if your write-off is higher than it has been on average in past years then an audit trigger is likely to be set. In the current economy, a higher write-off than normal is likely. The IRS will in an audit situation want justification that the write-off is valid versus being an illegal transfer of money to someone else or you "under-the-table". They will also want to know that it truly was unrecoverable.

Only an unbiased third party collection agency or debt/profit recovery company can offer irrefutable evidence that the write-off was valid and truly pursued yet unrecoverable.

The other thing most creditors must realize is that the debtors that put you in a write-off situation are really no better than a common criminal and infact are maybe even worse. Here is an example (relating to product vs. service) demonstrating why. A typical criminal sneaks in the back door of your business and takes product. A debtor, on the other hand, smiles as they walk in your front door and have you load good product onto a truck on your dock while you incur the cost of shipping to drop it on their doorstep yet they never pay you! You have to ask which is worse!

A key piece of final advice to consider at years end, following an unsuccessful third party collection/recovery attempt and subsequent write-off, is to send the debtor and the IRS a 1099 equaling the price of goods or service delivered. Basically, since they did not pay you, you have paid them income in the form of free un-paid-for product or service. Talk to your lawyer to get specific legal advice relating to doing this before proceeding. This will atleast give you some satisfaction to know that they will have to "pay the piper" taxes on this "stolen" good or service!


To inquire about how you can benefit from a flat fee of @$10 per late past due account via a profit recovery service which has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #YE "Use a Third Party Before Year's End"