There may well be an air of disappointment when a small company find that an invoice for projects completed or items supplied to a large company has gone past the agreed authorisation for payment date and remains late. The disappointment is that in the past all of the projects completed or items supplied have been paid for within the agreed authorisation for payment date but now the small company needs to have the revenue coming in so that they can pay their accounts. The directions that the small company may be aware of are likely to be solicitors or Debt Collection agencies and unless the small company has tried Debt Collection themselves in the past they are unlikely to know about Debt Collection Software, which can provide a self resourced
path.

If the small company wishes to use the lawyer or Debt Collection agency choice then they need to choose one that has expertise in commercial Debt Collection, and hope that they use ethical procedures when dealing with the large company or some harm may come to the commercial reputation the small company has built up over the years. Cost plays an important part in this move since the small company is really taking on the lawyer or Debt Collection agency to do the Debt Collection on their behalf and so their fees need to be met. The usual way of recovering these costs is to take a percentage of the debt once it is settled or sometimes a fee is required at the initiation of the procedure, perhaps if there is some uncertainty of the debt being settled in full. The actual charge can be 8% to 10% or greater which might be a substantial loss if the small company has need of all of the invoice value.

Debt Collection Software on the other hand is a different path to take for although it will cost the small company less cash to pbuy they will need to supply resources if they are to make the investment pay off. However from a price of under

This might seem like well worn management speak, but in the present financial downturn, when a small organisation finds that their latest invoice for work completed or equipment sold to a regular larger organisation has gone outstanding beyond the agreed final payment date might the small firms people have something to offer in the Debt Collection process?

When faced with this situation the small organisation would contact the larger organisation firstly and learn what is taking place. The hope would be that a simple error had been made and the invoice was simply overlooked but would now be paid as soon as possible. If the reply was not so clear but perhaps seemed like the large organisation was playing for time then the small organisation might feel that they were being used as a free credit service and might well look to Debt Collection options. Given the financial downturn and the fact that the banks still seem reluctant to offer financial support to small businesses, despite strong advice to the banks from the Chancellor of the Exchequer to the contrary, the small organisation might not be attracted to lawyers or Debt Collection agencies because of the fees charged. These fees might be in the range of 8% to 10% or more of the outstanding debt and payable as a deduction on settlement, there might also be expenses to be factored in as well. The option of doing the Debt Collection with their available resources with Debt Collection Software can look attractive from a financial viewpoint since decent suites can be had for under

There is an Act in place in the form of the “Late Payment of Commercial Debts (Interest) Act 2002” that was written to allow options for one organisation to press another organisation which owes them money into settling the invoice. The pressure that can be put on is in two forms, one is a fixed unitary payment and the other is interest on the outstanding debt.

The unitary payment is to compensate for Debt Collection work already executed and is worked out as follows:
For debts less than

In the current financial situation, when a small enterprise has been supplying services or products to a large enterprise on many occasions, it might be a setback when their last invoice has not been cleared by the agreed last settlement date. If the large enterprise has kept up a good clearance record in the past then the small enterprise might feel that they have a good enough business relationship that they don’t want to damage by going right into Debt collection methods and sending out Debt collection letters. If the small enterprise has a late settlement clause in their terms and conditions then they needs to apply this, but do it in an ethical and professional way, also keep the large enterprise informed of what they are going to do as this should not damage the business relationship.

It might be that the small enterprise has not had to handle Debt collection in the past and might now need to examine what their paths are. While they might be happy with sending out invoices and then a reminder for a late payer, they might be less sure with writing Debt collection letters. In any business decision, there are many influences but cost will always be one of the foremost influences and in the Debt collection sphere the financial outlay can vary dramatically between the various paths. There are three significant paths for Debt collection; a legal practice who is talented in Debt collection, a Debt collection firm with commercial skill and finally, Debt collection software. The first two paths allow the small enterprise to pass the Debt collection activity to a third party, while the third strategy brings the Debt collection activity in-house. As might be expected the financial outlay associated with the three different paths are very different as the legal practice and the Debt collection firm will usually set theircharges as a percentage of the debt which might equate to be a significant sum, although some might offer a no win no fee deal. On the other hand the Debt collection software might well cost under

There could well be an air of disappointment when a small company realise that an account for work completed or equipment supplied to a large company has gone past the agreed settlement date and remains late. The disappointment is that in the past all of the work completed or equipment supplied have been paid for within the agreed settlement date but now the small company needs to have the payment coming in so that they can pay their invoices. The strategies that the small company could be aware of are likely to be solicitors or Debt Collection organisations and unless the small company has tried Debt Collection with their own resources in the past they are unlikely to be aware of Debt Collection Software, which can provide an in-house
path.

If the small company wishes to use the legal practice or Debt Collection firm choice then they must decide on one that is experienced in commercial Debt Collection, and hope that they use ethical processes when dealing with the large company or some harm could come to the professional reputation the small company has built up over the years. Cost plays an important part in this option since the small company is really asking the legal practice or Debt Collection firm to do the Debt Collection on their behalf and so their charges need to be met. The usual way of recovering these costs is to charge a percentage of the debt once it is paid or sometimes a fee is required at the initiation of the procedure, perhaps if there is some uncertainty of the debt being paid in full. The actual fee can be 8% to 10% or above which may be a substantial loss if the small company has need of all of the account value.

Debt Collection Software on the other hand is a different challenge for although it will cost the small company less revenue to pbuy they will need to provide resources if they are to make the investment pay off. However at a starting price of under

The government legislation covering the Late Payment of commercial debts was introduced in November 1998 and amended on August 7th 2002, which incorporated EU Directive 2000/35/EC on combating late payment in commercial transactions.
The basis of this legislation is to permit a creditor to make a cost on the debtor plus the debt owed, as penalty for late payment. The cost varies according to the amount of the debt as shown in the table below.

Size of unpaid debt Sum to be paid to the creditor
Up to

If a small enterprise has done work or supplied goods for a larger enterprise and has then sent the account for the work or goods but after the required waiting delay the larger enterprise has still not paid the account, what risks are there for going straight to Debt collection?

If the small enterprise went to a solicitor or to a Debt collection agency or then again if they obtained Debt collection software to do the Debt collection themselves, one way or another, the larger enterprise would, at some point, receive Debt collection letters. This might well make the larger enterprise feel that the small enterprise didn’t understand why the account hadn’t been paid on time and were not bothered about the reasons why.

Apart from the major risk of the larger enterprise taking the decision not to use that particular small enterprise in the future, the other business risk is that the small enterprise might well be known as one that doesn’t talk to other organisations when an account problem emerges and simply goes right into Debt collection. A further risk awaits if the small enterprise choose to use Debt collection software and doesn’t read tutorials or use the help or even read the user guide to understand the legal side of Debt collection as well as how to best compose Debt collection letters. The risk here is that if the small enterprise eventually decides to take the large enterprise to court then they must show evidence of having tried hard to get the large enterprise to clear the account and failed. If they just send out Debt collection letters without communication with the large enterprise beforehand, this might not be acceptable as sufficient for a court.

Their best next step would be to first examine the contract for a late payment paragraph and if present, follow this procedure. If there isn’t such a paragraph then they have legal rights to charge interest on the unpaid debt as well as a one-off charge for Debt collection work. In this context they should contact the large enterprise and discover their reasons for not settling the account, as it might be a simple oversight on their part which they might well tidy up right away. On the other hand it might be that they are somehow unable to clear the account and they might have cash flow problems themselves because of uncleared bills of their own and so might ask for an extension to the final clearance date. These reasons might well be satisfactory for the small enterprise, as they will hope that they can get more work from the large enterprise, as the payment problems might be short lived. If however they aren’t given a acceptable reason for non clearance, then they might feel the need to take it further and start off the Debt collection operation.

If they decide to use either a solicitor who has Debt collection experience or a Debt collection agency then they might find that the bill for these services amounts to a significant proportion of the debt itself and if they are aware of these figures they might well check out the Debt collection software path as a method of carrying out the Debt collection themselves. In this context, as mentioned earlier, the small enterprise would be well advised to study the user guide that should come with the Debt collection software so that they both know about the Debt collection operation and how to compose good Debt collection letters. The Debt collection software should include either an internal database or a way of linking to an existing database application so that all happenings that are taken are recorded and date stamped. Events such as creating and sending out Debt collection letters, recording the arrival of post or emails from the larger enterprise and phone calls should all be registered as part of the work being done for the Debt collection operation and should be valid if the case comes to court.

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

In the current financial climate it should not be strange to find customers of companies that must return or exchange items, quite legally, to find themselves having to organisation. If the supplier had been taken down this road then it may be that exchange of items would not be an option as the stock could have been sold off so the customer would be left to add their claim to the rest of the claimants, which starts with the banks and the Inland Revenue & Customs. A private customer would be most unlikely to be experienced in Debt Collection methods and even be aware of Debt Collection Letters and Debt Collection Software that could be used. It might be that they would consult with a solicitor as a first step, and pay for the advice, or as a better option go to the Citizens Advice Bureau, where good advice is freely given. They might be told that they are placed on the end of a long list of creditors and are unlikely to be given much of the debt, if anything at all. Their choices might be set out as; a solicitor, a Debt Collection agency or maybe, if the advisor is aware of it, the DIY approach by using Debt Collection Software.

Hopefully they will be told about the ball park outlay required of each option and this alone should push the customer towards the DIY approach, as this option might easily be in the range of

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.