In the present financial downturn, cash flow for businesses may be difficult, in that if they are owed money for work or sales they will have to consider their options on Debt collection. Do they take it on by talking to the debtor company or do they employ the services of a solicitor to pursuefollow up the debtor for settlement. A Debt collection agency may offer seemingly tempting deals for example no win no fee, but such agencies may consider that simply a paltry payment from the creditor is a win and so take their fee, which may be based on the complete debt. Not all Debt collection agencies would behave in this way, but would their web sites display this level of detail and so permit the creditor the knowledge to undertake an informed decision? The other option is to do the Debt collection in house by using a Debt collection package, comprising Debt collection software and Debt collection letters. Such packages can be purchased from under £50 and companies who sell these packages should be able to give full details of what is included and maybe also some idea of the time required to work through the application for a normal Debt collection process. The costs for a solicitor or a Debt collection agency are likely to be on a sliding scale and would typically be calculated from the debt amount, although a solicitor may ask for a set fee for the first letter, any further Debt collection letters may be an additional cost perhaps.
When operating Debt collection software packages both the creditor and the Debt collection software should know about the Late Payment of Commercial Debts (Interest) Act 2002, which was first set up in November 1998 and amended in August 2002. This law allows a creditor to claim both a one-off payment and also interest payments as soon as an account becomes overdue. If the creditor has not cited this act in the original contract with the debtor, there is nothing preventing them from implementing the aforesaid charges. However it may cause some worry from the debtor to be just shown a higher invoice and this may bring in problems should the creditor later submit an application for a new contract with the debtor enterprise. To try and stop this from coming about it would be best for a creditor that didn’t refer to the act to contact the debtor either by phone or by personal appointment and courteously tell them that the bill is late and they would not wish to have to implement the charges that they are entitled to do by the act.
If this fails to stir the debtor into payment, then the creditor will need to use the Debt collection software in earnest and generate Debt collection letters, which should already be available in the Debt collection software as examples, ready to use after the debtor information is entered into the database. The creditor should be able to edit the Debt collection letters text to mirror their situation or relationship with the debtor, but they must avoid emotional wording as this will show them in an unprofessional light with the debtor. By using this process it is hoped that the debtor will be persuaded to settle the bill and also pay up on time in the future.
