In the current financial downturn, when a small organisation has been providing services or goods to a large organisation on many occasions, it may be a setback when their last invoice has not been paid by the agreed last payment date. If the large organisation has kept up a good clearance record in the past then the small organisation may feel that they have a good enough business relationship that they don’t want to damage by going right into Debt collection procedures and sending out Debt collection letters. If the small organisation has a late payment clause in their terms and conditions then they should apply this, but do it in an ethical and professional way, also keep the large organisation informed of what they are going to do as this should not damage the business relationship.
It may be that the small organisation has not had to take care of Debt collection in the past and may now need to check out what their options are. While they may be happy with posting invoices and then a reminder for a late payer, they may be less confident with composing Debt collection letters. In any business decision, there are many factors but money will always be one of the foremost factors and in the Debt collection world the financial outlay can vary greatly between the various options. There are three significant options for Debt collection; a solicitor who is talented in Debt collection, a Debt collection company with commercial experience and finally, Debt collection software. The first two options allow the small organisation to pass the Debt collection procedure to a third party, while the third strategy brings the Debt collection procedure in-house. As may be expected the financial outlay associated with the three different options are very different as the solicitor and the Debt collection companies will normally set theirfees as a percentage of the debt which may equate to be a significant sum, although some may offer a no win no fee deal. On the other hand the Debt collection software may well start at under £100. The major difference here in cash terms is that the solicitor and Debt collection companies would invoice for every future Debt collection they were commissioned to handle, whereas the Debt collection software is one off purchase and so would only require running costs such as paper, printer consumables and postage costs.
The Debt collection software would also incur a cost in people terms since a employee would need to be set aside to operate the Debt collection software, at least as one part of their duties. The small organisation may feel that a second employee who could be trained up would provide cover for sickness, holiday or other absence, all taking time away from their normal activities. The core part of Debt collection is to write convincing Debt collection letters, which the solicitor and Debt collection companies should be comfortable with, while to compensate, the Debt collection software should provide a user guide and templates of Debt collection letters. The Debt collection software should advise the small organisation of the importance of a plan of action and with this in mind there should be templates of Debt collection letters that are appropriate for each stage of the plan. The small organisation may need to tailor the Debt collection letters around any late payment clause in their terms & conditions so that they look correct to the large organisation.
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