The recession has generated much tightening of purse strings not least by the finance houses when it comes to granting support to small companies in the UK and with the national debt now over £122bn, it could seem ludicrous that finance houses have made big profits and can continue their extravagant bonus handouts, but are reticent to lend to small companies.
When a small firm has done projects or provided equipment to a larger firm and the larger firm has left the account unpaid after the agreed last payment date, this could have a significant affect on the cash flow of the small firm, since they will have to pay a weekly salary bill maybe and their own bills for materials or sub-contract labour used will need to be paid. It could be unwise to pay out for legal practices or Debt Collection firm when they could not be aware of the financial status of the larger firm. It could be assumed that the small firm would get in touch with the larger firm and try and understand what has occurred, most importantly if the small firm has done projects or provided equipment on many past occasions and had no difficulties with unpaid bills. This rather sudden occurrence could point to difficulties with the finances of the larger firm, which could mean that the small firm might not be certain to receive all of their payment if the larger firm went into administration. This is somewhat a worst case scenario and it might be hoped that the small firm might get a more positive answer to their enquiry, either a simple problem has been found and will be fixed, or they are actually short of money and would part payments do?
If the larger business’s answer seems like delaying tactics then the small firm could feel justified in starting Debt Collection actions, but if the small firm is indeed facing cash flow problems then legal practices or Debt Collection firm could be ruled out, since they could levy a fee to take on a case, and unless they can be certain of success, the small firm could be left to pay costs if it goes to court. In this instance the small firm can do no worse that evaluate Debt collection software as a procedure for handling the Debt Collection process with their own resources. Debt collection software systems can start under £100, which could be easily affordable and so worth a try. The small firm will have to cater for internal costs such as employees time spent operating the Debt collection software, which will take time out from their normal activities, since a new member of staff could well be out of the question. They will also need to have a suitable PC on which to install the Debt collection software and a good quality printer to print off Debt collection letters. Debt collection letters form the heart of the Debt Collection process so the small firm needs help from both sides; the Debt collection software should provide documentation which explains the Debt Collection process and also goes into detail about composing convincing Debt collection letters, the employees will need to have a good command of English since the large firm will get the Debt collection letters and could judge the small firm on their content, so to be sure it would be best of each letter is proof read before it is sent.
It would be hoped that with these issues addressed adequately, the small firm can write and send good quality Debt collection letters that will show the larger firm that they are serious and they should get the debt paid.
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