Jefferson Capital, which recently acquired Canaccede Financial Group, is well-known for sharing its legal and compliance best practices with members of the consumer financial services industry. In the following article, Jefferson Capital and Canaccede Financial Group review why 2023 is the year to look for a receivables management partner for your business.
When it comes to business, it’s critical to consider the different economic and financial challenges that a company is likely to face at any given time. However, with a recession seeming like a very real possibility sometime soon – potentially as soon from the first half of 2023 – taking steps to prepare is crucial.
Canaccede Financial Group reviews that taking the necessary steps to create cash reserves for funding future growth after the economy becomes more stable is integral, regardless of whether this carries on for a long or short span of time. Accordingly, addressing receivables is integral as well.
The Challenge of Underperforming Receivables
Recessions come with numerous challenges for firms. Just one such example is the struggle to collect receivables from debtors.
Naturally, during a recession, discretionary spending falls. This can often cause debtors to maintain a firmer grip on their savings. From the business’s perspective, this can leave receivables performing poorly (or not at all).
Tackling Underperforming Receivables
Canaccede Financial Group reports that underperforming receivable debts are often simply a fact of life during recessions. However, there are steps that a firm could take to tackle these issues.
It is crucial to consider the potential for multiple income streams. During recessions, the number of self-employed businesses and individuals spikes. This is largely due to companies hiring fewer staff and potentially even laying off existing team members. As part of the company’s receivables management, Canaccede Financial Group reviews the crucial nature of considering establishing multiple income streams.
However, this isn’t the only measure a business can take to be proactive. Another option is to outsource receivables management. This can help optimize a business’s collection processes to remain within reasonable measures. In turn, firms can then look at opportunities for monetizing receivables, thereby supporting flexibility and overall resilience throughout a difficult economic period.
The Danger of Insolvencies
In many cases, one of the most often overlooked aspects of recession economies is insolvencies. From a historical perspective, Canaccede Financial Group explains that the largest recessions in the US have all been accompanied by significant levels of insolvency. These include the periods in 1932/33, 1937, and 2008. However, this isn’t always easy to predict. In fact, atypical recessions can really end up “throwing a wrench in the works.”
Canaccede Financial Group notes that, unfortunately, insolvencies tend to pose a major challenge for firms with outstanding receivables. It’s not uncommon for businesses to file claims late, with monetization suddenly becoming a major concern.
Fortunately, partnering with a dedicated processing partner may help promote the success of the company’s investments, even during the overall more difficult economic markets. This can provide massive benefits to the business’s overall cash flow, thereby reducing the risks associated with maintaining debts.
Flexibility is Critical
Unfortunately, very few people will benefit from a recession. While a small number of businesses might end up profiting – such as economists and DIY chains – this is generally the uncommon exception. Accordingly, Canaccede Financial Group reviews how maintaining flexibility is crucial for firms that intend to come out of a recession in a positive place.
Unfortunately, this is also true for non-performing receivables. While every company wants to avoid these, the reality is that fully outpacing them is nearly impossible. However, managing a receivable carefully with a flexible approach can help immensely. Thus, a non-rigid focus is exceptionally important. How can companies actually achieve this, though?
Canaccede Financial Group maintains that as part of having a flexible approach, businesses should look at opportunities to adapt their normal processes. Implementing new debt recovery strategies, for example, could help the brand see more of the investment come back. This could also mean the difference between a receivable being profitable or not.
Canaccede Financial Group reviews the ways that recession scenarios are exceptionally difficult for businesses to endure. For firms operating with receivable assets or debts in particular, things can take a sharp turn for the worse.
Non-performing receivables are nearly guaranteed in recession scenarios and other such economic crises. That doesn’t mean businesses can’t prepare or plan for them, though! In fact, with a targeted, measurable approach, it can be possible for a firm to integrate safe and effective strategies that overall negate potential losses.
As part of a flexible debt recovery plan, considering outsourced opportunities could provide value for the investor. Notably, these services are often tailored to the business and debt(s) in question. Thus, this can allow companies to integrate a more practical and realistic recovery strategy to support cash flow and overall debt recovery.
A Note Regarding Canaccede Financial:
Canaccede came together in a big way last year (2022) to lend their support to some incredible causes. Through generous donations from payroll deductions, Canaccede was able to collectively contribute $5,505 towards initiatives dedicated to apprising mental health conditions and animal welfare awareness – all the way through assisting young people facing inequalities, combatting homelessness with food drives. Canaccede thanks those for being part of this milestone moment by supporting Canadian Mental Health Association, Greenpeace Canada, Ontario SPCA and Humane Society; Chron’s & Colitis Canada, Big Brothers & Sisters Canada; Ronald McDonald House Charities SWO; London Abused Women’s Centre & Canadian Red Cross and London Business Cares Food Drive.