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In the present recession, cash flow for organisations may be a problem, in that if they are owed money for work or sales they will have to consider their options on Debt collection. Do they start by talking to the debtor company or do they engage the services of a solicitor to pursuefollow up the debtor for payment. A Debt collection agency could offer curiously lucrative deals such as no win no fee, but such agencies may take it that just a minor payment from the creditor is a win and so collect their fee, which may be reckoned on the whole debt. Not all Debt collection agencies would work in this way, but would their web sites display this much detail and so give the creditor the knowledge to undertake an informed decision? The other option is to take on the Debt collection themselves by making use of a Debt collection package, comprising Debt collection software and Debt collection letters. Such packages can be had from under £50 and companies who distribute these packages should be assumed to be able to give exact details of what is contained and maybe also some idea of the time required to use the software 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 generally be based on the debt value, although a solicitor may charge a set fee for the first letter, any further Debt collection letters may be charged extra perhaps.
When running 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 originally set up in November 1998 and amended in August 2002. This legislation allows a creditor to claim both a one-off payment and also interest charges once an account goes overdue. If the creditor has not referred to this act in the original contract with the debtor, there is nothing in the way of them from implementing the aforesaid charges. However it may cause some concern from the debtor to be just shown a higher bill and this may bring in problems should the creditor later submit an application for a new contract with the debtor business. To try and save this from coming about it would be best for a creditor that hasn’t referred to the act to contact the debtor either by phone or by personal visit and courteously inform them that the account is late and they would not wish to have to make the charges that they are entitled to do by the act.
If this fails to stir the debtor into payment, then the creditor will should use the Debt collection software in earnest and compose Debt collection letters, which should already be contained in the Debt collection software as templates, ready to use once the debtor details are entered into the database. The creditor should be able to amend the Debt collection letters wording to mirror their situation or relationship with the debtor, but they must resist using emotional wording as this will show them in an unprofessional light with the debtor. In this way it is hoped that the debtor will be persuaded to settle the account and also pay up on time in the future.