Sooner or later, every business has to face the problem of a client who doesn’t pay and is unable to negotiate settlement. If you’re running a new business it may become the only time that you have faced the issue of late payments and been forced to think about using an agency for debt collection Manchester, even if you are established and you have a good track record, late payment is likely to be a problem that occurs so frequently that you’re still not sure what the best solution is to resolve the issue and to recover the amount owed.
Late payment or bad debt?
It is important to recognize that there may be reasons why you have not received your money and, if the amount due isn’t disputeable, the reason is likely to be because your customer has financial problems. If they’re unable to pay you they’ll not be able to pay their other suppliers who may consider the possibility of pursuing debt collection actions. It is vitally important to take action quickly as the longer you spend repeating the process of sending mail, emails, and phone calls the less chance you have of recovering payment. If the initial letter was unsuccessful and the second one did not, the third one will definitely not work and a different supplier could have instructed the third party and was paid.
There is an internal credit control system and guidelines you must follow, and you must ensure that you establish the point at which a late payment can be considered a debt. It should be based on past payment history and industry-specific information about payments. In certain sectors and industries, payments after 60 or 90 days is not uncommon for construction companies for instance. It is best to establish a procedure of drawing a line in the sand and deciding whether it is 30 days over the terms or 45 days past terms, whatever you decide is the point that late payment becomes debt you must immediately refer the account to an external third party for collection.
Debt collection solicitors
An email from an attorney is often enough to spur the debtor to act in the event that they are threatened with court proceedings. The issue with solicitors is their cost that you have to agree to pay a percentage that can be as high as 20% on any money recovered. There are solicitors who offer a letter before action service for as little as PS2.00 These letters are designed to have minimal impact and rarely lead to payment, leaving you with the only option of issuing an action and paying the solicitors’ fees to represent you in Court. It is also worth considering whether you’ll actually be paid after successfully obtaining an order in court. The solicitors don’t thoroughly look into the debtor’s financial situation and ability to pay, your Judgment could be one of the 40 percent of CCJ’s that are never paid, and you could have saved the money you’ve spent on legal fees.
Debt collection agencies
Before you decide to issue legal proceedings it’s worth considering the option of contacting a debt collection company. Most agencies now offer the no-cost no-cost service, so there is no chance of avoiding this option prior to engaging in legal proceedings. Contact from a third party debt collection expert, be it a paid solicitor or an agency that operates on a no-success no commission model, is usually enough to entice those who do not want to bribe debtors into paying up. It might not be enough to recover payment from businesses or companies in distress and cannot pay, however, that is another reason to hire a debt collection agency. Inquiries by the agency into the debtor’s financial status in the future, their trading prospects and ability to repay the debt could result in a recommendation to write off the debt and seek tax relief, instead of paying Court and solicitor’s fees when there is no possibility of ever receiving the money.
The Little Red Journal Business Pages