costs for loans term recovery or partial payments are higher than costs for payment at one time (pointing to a fixed time period, or 30, 60, or 90 days date). Therefore, when required structured collection costs should take into account the above points.
Each installment credit, you must be registered to detail and customer receipts or written reports of the movement and status of your account. When the credits are a considerable amount, the cost of collection is reduced, it is not advisable to make small-scale credit if you have a working method adapted to the demands of this type of credit.
The cost of money invested creates an interest to be charged with considering the outstanding balance in many cases payment is not adjusted to the date or indicated in the contract. Thus in the following section will detail the interest rate applied to the formal collection when it is executed within the scope of the company. To do a better detailed explanation regarding the description of the interests and legal costs from the legal standpoint.
14.1. FIXED COSTS
are all costs that do not vary in time tracking and billing management. Some of them are permanent staff costs, office maintenance, regular or rigorous paperwork, etc.
14.2.
VARIABLE COSTS are those that vary over time and are the most significant and costly to manage collections. These are: telephone, letter, facsimile, legal formalities (protests and legal actions), outsourcing, (lawyers, agencies collection, research services, etc.
But we also have costs for collecting delinquent. Here we note that increases in legal collection, such as interest on arrears and compensation, court costs etc. including personnel and procedural safeguards that described below.
15. PLANNING TOOLS
Having estimated the fixed and variable costs, including in these the average grace period that will be allotted to overdue accounts, there shall be adding the factor "interest credit." This should consider the expected utility in the business objectives and conditions market, with emphasis on the interest it charges competitors. Therefore, if you want to start credit operations, this interest must be less than the competition in order to be placed in a position in the market.
other hand, if demand for our products increases, this increase should be reflected in the cost of selling the product in cash, without changing the interest rate as a strategic measure, in the case of trade credit. This will help keep prices stable credit as an attractive option to customers and in response to competition.
16. PROFITABILITY OF OPERATIONS COLLECTION
To get a better view of the collection process, try to determine the balance point of the "accounts receivable" using the chart and shift the point of equilibrium and the effects of the backlog of unpaid bills and not paid. Here is how variable costs are increased significantly affect operating profit of accounts receivable.
It expresses the diagram, we can say that in the first quadrant indicates that as a grace period of 30 days and the payment of "X" currency units We define a Unit "A", after fixed costs and variable.
If you look at the units obtained at point "A" of the graph and scroll down to the drive "C" will conclude that the longer the days of delay, the less you see reflected our usefulness, taking into consideration the increase in variable costs. Additionally, aspects that can make these profits are even smaller than the graph above, the costs are "real" from the financial point of view are detailed below:
a) The opportunity cost of capital
b) Cost deficit financing of the capital.
c) Inflation.
d) the devaluation.
and actual costs from the point of view of marketing are;
a) Loss of customers for legal or judicial action.
b) Lack of stocks because they have no liquidity.
c) Reduced infrastructure and technology.
d) decrease in product quality and service.
Each installment credit, you must be registered to detail and customer receipts or written reports of the movement and status of your account. When the credits are a considerable amount, the cost of collection is reduced, it is not advisable to make small-scale credit if you have a working method adapted to the demands of this type of credit.
The cost of money invested creates an interest to be charged with considering the outstanding balance in many cases payment is not adjusted to the date or indicated in the contract. Thus in the following section will detail the interest rate applied to the formal collection when it is executed within the scope of the company. To do a better detailed explanation regarding the description of the interests and legal costs from the legal standpoint.
14.1. FIXED COSTS
are all costs that do not vary in time tracking and billing management. Some of them are permanent staff costs, office maintenance, regular or rigorous paperwork, etc.
14.2.
VARIABLE COSTS are those that vary over time and are the most significant and costly to manage collections. These are: telephone, letter, facsimile, legal formalities (protests and legal actions), outsourcing, (lawyers, agencies collection, research services, etc.
But we also have costs for collecting delinquent. Here we note that increases in legal collection, such as interest on arrears and compensation, court costs etc. including personnel and procedural safeguards that described below.
15. PLANNING TOOLS
Having estimated the fixed and variable costs, including in these the average grace period that will be allotted to overdue accounts, there shall be adding the factor "interest credit." This should consider the expected utility in the business objectives and conditions market, with emphasis on the interest it charges competitors. Therefore, if you want to start credit operations, this interest must be less than the competition in order to be placed in a position in the market.
other hand, if demand for our products increases, this increase should be reflected in the cost of selling the product in cash, without changing the interest rate as a strategic measure, in the case of trade credit. This will help keep prices stable credit as an attractive option to customers and in response to competition.
16. PROFITABILITY OF OPERATIONS COLLECTION
To get a better view of the collection process, try to determine the balance point of the "accounts receivable" using the chart and shift the point of equilibrium and the effects of the backlog of unpaid bills and not paid. Here is how variable costs are increased significantly affect operating profit of accounts receivable.
POINT OF BALANCE OF ACCOUNTS RECEIVABLE
It expresses the diagram, we can say that in the first quadrant indicates that as a grace period of 30 days and the payment of "X" currency units We define a Unit "A", after fixed costs and variable.
If you look at the units obtained at point "A" of the graph and scroll down to the drive "C" will conclude that the longer the days of delay, the less you see reflected our usefulness, taking into consideration the increase in variable costs. Additionally, aspects that can make these profits are even smaller than the graph above, the costs are "real" from the financial point of view are detailed below:
a) The opportunity cost of capital
b) Cost deficit financing of the capital.
c) Inflation.
d) the devaluation.
and actual costs from the point of view of marketing are;
a) Loss of customers for legal or judicial action.
b) Lack of stocks because they have no liquidity.
c) Reduced infrastructure and technology.
d) decrease in product quality and service.
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