Every business is faced with the challenge of a customer who doesn’t pay and is unable to negotiate settlement. If you’re running a new company, it could represent the very first instance that you have experienced the problem of late payments and had to consider the possibility of a debt collection agency, even if you are an established company the issue of late payments will likely be a problem you experience so infrequently that you’re still not sure about the best method to resolve the issue and collect the amount owed.

Late payment or bad debt?

It’s essential to realize that there is reasons why you have not been paid . And if the amount due isn’t disputable, the reason will most likely be that your client is in financial difficulty. If they have been unpaid, they’ll be unable pay their other suppliers, some of whom will also be thinking about the possibility of pursuing debt collection actions. It is crucial to take action quickly because the longer you are wasting on the process of sending emails, letters and phone calls the less chance you have of recovering payment. If the first letter did not work, the third letter is almost certainly not going to work while a different provider may have given instructions to an unrelated third party and received paid.

There is an established credit control procedure and guidelines you must follow, and you have to ensure that this includes establishing the moment when a late-paying customer becomes a debt. This should be based on past payment history and industry-specific data on payments. In certain industries and fields, the delay of payment for 60 or 90 days is not uncommon in the construction sector for example. It is important to have a system of drawing lines in the sand or perhaps thirty days past the due date or 45 days past the terms or whatever is when late payments become debt and you have to immediately send the account to an outside party to collect.

Debt collection solicitors

Letters from solicitors usually enough to convince the debtor to act, especially if they are threatened with Court legal proceedings. The issue with solicitors is their cost that you have to agree to pay a percentage that can be as high as 20% on any money recovered. There are solicitors practices that offer a letter before action service for just PS2.00 however these letters are designed to be of minimal impact and rarely lead to the payment you need, leaving the only option of initiating proceedings and paying the solicitors’ high fees for representation in Court. It is also worth considering whether you’ll actually get paid once you have obtained a Judgment in Court. Lawyers do not take the time to thoroughly research the financial standing of the debtor as well as their capability to pay. Consequently, your Judgment may be among the 40% of CCJ’s that are never paid. You may also have saved the money you have wasted on legal costs.

Debt collection agencies

Before you decide to commence legal action, you should consider the option of contacting debt collectors Leeds. Most agencies now offer a no collection no fee service, which means there’s nothing to lose by exploring this option prior to making a legal move. Contact from a third party debt collection practitioner, be it a paid solicitor or an agency working on a no success no commission basis, is often enough to prompt the do not want to bribe debtors into paying up. It may not be enough to recover payments from businesses or companies that are in distress and cannot pay. That is an additional benefit of working with a debt collection agency. The agency’s investigations into the financial health of the debtor as well as future prospects for trading and capacity to pay the debt could result in the recommendation to write off the debt and claim tax relief instead of paying Court and solicitor’s fees when there is no chance of ever receiving payments.