Dealing with debts can be frustrating, and time-consuming for you and your business, and while in our many years of experience have taught us that there is no such thing as a ‘one-size-fits-all’ approach, there are certain strategies that can help with most cases.
We cannot overstate the importance of maintaining polite, clear, and unambiguous communication. It might be that you are dealing with a company that routinely pays late, or perhaps a business that owes you money is experiencing a short-term cash flow challenge. There could be genuine hardship involved, perhaps there is a dispute over the quality of goods or services, or it could be that they just don’t want to pay.
But before we talk about the process of debt collection itself, let’s take a step back and look at your credit control processes.
Effective credit control is vital to the vast majority of businesses, unless money comes in on time, your cash flow situation can be seriously affected, and as we all know, this is when things can start to go wrong with even the best businesses.
Setting a level of debt that you are comfortable with is vital, it is called Credit ‘Control’ after all. This process should not be taken lightly, and there are a number of factors that you should look at, including the credit worthiness of your customer, and your own cash situation, we can help you with this.
So, let us presume that your credit control operation is robust, that you have done everything that you can to avoid late payment, and you are still owed money.
- You have sent the invoice, made the courtesy call to ensure receipt and confirmed when payment is due, followed up with another call, and sent an email reminder that the payment is now overdue.
- This process might have taken anywhere between 14 and 30 days, and there is still no payment, so what next?
- You can send a polite, but unambiguous letter explaining the situation, possibly suggesting that under the Late Payment of Commercial Debts (Interest) Act of 1998, you have the right to charge interest.
- Then, send another letter, explaining that unless the debt is settled within 7 days, it will be passed to a registered debt collection agency.
These are your rights, but before embarking on this course of action you should consider very carefully what you have to gain, and what you have to potentially lose.
Building a strong business relationship is vital, you should know your customers and never forget that a customer that you have helped is far more likely to return than one that you have chased relentlessly.
It’s a fine balance, and it is something that we can help with. We have many years-experience in handling debts, and debtors of all shapes and sizes, we will act on your behalf, before, during and after any collection process, and often we can do this without your customer even being aware that we are working with you.
Remember the old adage…’an ounce of prevention is better than a pound of cure’.
You can read more about our services here, and we have created fact sheets for you to download and share, free of charge
Credit Control
Invoice design
Cash Flow, and Forecasting
