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When a small firm has done regular work for a larger firm they may discover that they have less opportunity to do work for other enterprises and so may start to depend to some extent on this larger firm for their business security. In these still tight financial times, good contacts are valuable and should be retained, but if they are also regular late payers, this can put a strain on the finances of the small firm. The small firm might thus find themselves treading a fine line between convincing the larger firm to pay on time and losing them altogether and so making their firm suffer, possibly to a great extent. If the small firm has not been in this situation in the past then they might need advice on how to best tackle this difficulty but the costs that could be involved in the various options may well be a deciding factor. Essentially there are three methods of achieving the objective of keeping hold of the customer and getting paid in timely fashion in the future; a Debt collection business, a solicitor, or a DIY package that includes Debt collection software and Debt collection letters. The last option is not only the cheapest but will also allow the small firm to do the work in-house, which gives them control of the process, but does require resource to be identified.
The key to keeping the customer is really to approach them in a professional, courteous and unemotional manner as this will not only hopefully prove successful but will also put the small firm in a good light as a professional outfit. To achieve this, the Debt collection software has to be able to supply Debt collection letters that meet the above requirements and also stress the importance of prompt payment to the small firm. Any decent package of Debt collection software must come with a manualthat explains clearly how the Debt collection process works and worked examples would be so useful in making this clear, as well as showing how the Debt collection software itself works.
Since the Debt collection letters are at the core of the Debt collection process the small firm must need to know that they have the tools to compose suitable Debt collection letters, since it may well take more than one to reach a satisfactory conclusion. It would be best if such Debt collection letters were provided as either examples or templates in the Debt collection software, so that the small firm can easily tailor them with details of the large company and the debt. Better still if these details can be input into the software and then automatically pulled in to each Debt collection letter it would be much easier.
There is legislation available to companies in the form of the “Late Payment of Commercial Debts (Interest) Act 2002”, which allows the small firm, i.e. the creditor, to make a one off charge against the large firm, i.e. the debtor, for an overdue payment, as well as this they can also charge interest on the outstanding debt. The creditor does not have to make these charges, but it would be a wise move to try and agree with the debtor that this should be part of a revised contract, so that both parties have agreed that payments must be made on time and there will be no need for a Debt collection process.