Keeping A Firm Afloat When They Are In A Recession.
A financial downturn can affect companies in different ways, for some it can put them out of business, some can keep running more or less as normal, such as the financial institutions including those that were funded by the government, whilst most likely the majority can keep going but see that they have poor sales, increased stock prices and maybe late payers and/or bad debts.
For this last group, managing the income is important and the ability to handle Debt collection efficiently may be the difference between survival and failure. There appear to be three primary choices for Debt collection: solicitor, Debt collection business and do it yourself.
When considering how to manage late payers, the companies that are feeling the effects of the financial downturn must think hard if they want to keep hold of the customer for their products or services concerned or can they afford to perform no more contracts from them. The latter choice should be taken with care because it could result that the creditor company ends up with their reputation damaged in the process. This question is vital as it can change the approach that is chosen in Debt collection, because, if the Debt collection business approach is chosen then they must be sure that the business is registered with the Credit Services Association (CSA) as this shows that they are licensed by the Office of Fair Trading (OFT) to practice. This is not often obvious from some web sites, but it can be checked out at the OFT and if there is an issuew then that Debt collection business is to be avoided. They may have been refused a licence or had it withdrawn for using unethical practices when trying to collect debts, which would almost certainly have a harmful effect on the creditor’s reputation.
Where a business has late payers but wants to keep hold of their people then they must use an economical route for Debt collection and this is where the DIY option comes into play, as with this option they are in in the driving seat of what is done in the writing of Debt collection letters to ensure that not only ethical wording is used, but also courteous and unemotional wording. The best option would be to try and buy a package of Debt collection software along with a user guide on the subject from the same supplier, so that the software should compliment the user guide and vice versa. A good Debt collection software system ought to include templates for the Debt collection letters that are tailored for each of the component parts in the Debt collection approach, which should be fully documented in the user guide. Similarly the Debt collection software should be able to record what events a user has performed in order to provide a report for use by a solicitor in case the debtor does not respond to the DIY Debt collection approach and they need to be taken to court.
If the creditor does have to use the services of a solicitor then that person will want to be sure that the creditor has carried out sufficient attempts to get the debtor to pay up, even if it is just a part payment to start, before they would take the legal choice. As noted earlier, a good package of Debt collection software should be designed around this legal route being taken at some stage in the Debt collection approach and so it should be able to accept inputs for all key events and then generate an acceptable output.
It is hoped that most debtors would pay the debt during the DIY Debt collection approach and the legal step would only be needed for those who were still in business but stubborn.
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Tags: collection, debt recovery, invoices, overdue, past due
