Where a company has completed a project for another company and has had the job signed off by the Project Manager and then presented their invoice only to later discover that the closing date for payment has passed and payment has not been received, and they have not paid despite several phone calls. If the company carrying out the work is small then they may have taken on sub-contractors to take on key sections of the project, and these contractors will then find themselves in a chain of payment. Each of the parties concerned may have worked together many times and depend on this carefully formed supplier-client relationship to bring in a steady flow of money, so the last thing any of them wants to do is send bailiffs into the company which had the project work done in the first place.

The case of what is essentially the main contractor, which is the company that employed the sub-contractors, is one where they need to lead the Debt Collection process but in a way that has the least destructive effect on the working relationship they have both ways. The sub-contract company can only really chase the main contractor, but as they would have been informed of the payment difficulties from the client company, it is in their interests to help the main contractor rather than chase them. The main contractor may well have limited reserves with which to handle this problem, not the least of which being money, so they would need to look for the most cost effective answer that has a probable chance of completing the Debt Collection process to a agreeable conclusion for everyone involved. At present there seem to be three routes that can be taken to carry out this: Debt Collection agencies, the legal system, and the Do It Yourself approach. Each of these routes has pros and cons that must all be thought through before making the choice.
Each route offers different levels of service at commensurate cost, ranging from the DIY method needing local resource to operate the operations, then the Debt Collection agency and last but not least the legal system where the solicitor can handle the process with minimum time from the client.

The DIY route really should comprise a suitable package of Debt Collection Software and a fully documented manual on how the Debt Collection method works, how to operate the Debt Collection Software, especially how to compose Debt Collection Letters, which are the papers that will be posted to the client company. These Debt Collection Letters are key to the process so must be checked carefully before beinbg despatched. The Debt Collection Software would also have the capability to handle user input such as marking operations like Debt Collection Letters being sent out, letters being received and then the capability to attach a scanned pdf file. The final result would be a system that would log and date & time stamp the operations that occurred through the Debt Collection activities and could print this out so that it could be passed on to a Debt Collection agency or a solicitor, should this be the next stage. The cost of the Debt Collection Software and manual is likely to be less than

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Tags: collection, debt recovery, invoices, overdue, past due

This entry was posted on Saturday, January 30th, 2010 at 7:27 pm and is filed under Business and Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.