In the present financial climate and when banks are still reluctant to lend finance to small firms it might come as nothing unusual to find that small firms have to wait longer for bills to be settleled for work done or goods supplied to large firms. It might be that the large company is itself waiting for its own bills to be settleled, or it could be that they simply want to keep hold of their cash for as long as possible. While the small company might appreciate the difficulties that the financial climate is causing to most firms, their own difficulties will be their first priority and so they will be persuaded to press the large company to clear the bill. They might imagine a court case as one strategy but this might work out expensive especially if there is no guarantee of winning and being awarded costs from the large company, so this may well be seen as a last resort to be used only when all other Debt collection processes have failed.
The first move that the small company should make is to contact with the large company and find out why the bill has gone past its final date for payment. The reply from the large company might well decide the tactics for the small company, but they need to be aware that they will have to make efforts in Debt collection before they will be permitted to go to court, so they might as well make the effort and try and recover the debt. The small company might well look for the most economical strategy for Debt collection and so the charge of some 10% or more of the outstanding debt, which is levied by lawyers or Debt collection firm, might seem rather high when the small company has a low cash flow. Debt collection software however, can be purchased for under £100 and this can be seen as an inexpensive way for the small company to carry out the Debt collection process themselves. The small company need to evaluate Debt collection software packages carefully, paying attention to the Debt collection letters side as these form the centre of the Debt collection process since they show information flow between the parties, which might well be crucial if the case goes to court.
A good Debt collection software package need to give the user a good grasp of the Debt collection process by the use of documentation or on-line tuition. The best way to write Debt collection letters need to be detailed, while by the supply of examples of Debt collection letters relevant to each stage of the Debt collection process, the small company need to be able to write their own, customised Debt collection letters. The small company will be advised to make allowance for resources being essential for the Debt collection software, such as one or more persons to run the system, a suitable computer to install the Debt collection software onto and a printer to print hard copies of the Debt collection letters. The Debt collection process should be a part-time process for the small company so the people aspect might not be so bad and of course if they need to handle future Debt collection they are already set up with no extra cash to pay out.
By using people with a good standard of English and the guidance from the Debt collection software instructions, it is hopeful that the Debt collection letters will persuade the large company to clear the bill and not to delay settlement in the future and so a court case need to be avoided.
