How A Small Company Can Keep Debt Collection To Themselves And Handle A Large Company That Is A Late Payer.
When a small firm has done projects for larger enterprises and one or more has defaulted on the latest accounts, the costs of dealing with this via solicitors skilled in Debt collection or Debt collection businesses can be high in comparison to the cash available to the small firm. In these times the small firm could think about an in-house path where the purchase of Debt collection software can be a fraction of the solicitor or Debt collection company costs and so be an attractive path. They will need to evaluate what is available on the market for a suitable package that comes with as many useful functions as possible for a reasonable price, nothing unusual there then.
Before taking this route, the small firm needs to really firstly check the contract for a late payment paragraph and think about following up on that. Without such a paragraph the “Late Payment of Commercial Debts (Interest) Act 2002” stipulates the late payment date as 30 days after the invoice is received for work done, or after the supply of goods. If the invoice is still unpaid after this date the legislation allows the small firm to charge daily interest on the outstanding debt and also make a fixed one off charge to cover the costs of the Debt collection work. The small firm needs to in any event get hold of the large firm and find out why the invoice has not been paid as this can on occasion prove useful if there is a simple explanation. It also shows the large firm that the small firm has an ethical and professional approach to business and does not use a shoot first ask questions later approach to payment problems.
If the payment issue can be closed from the communication, then that could be sufficient and there will be no need for Debt collection to be initiated. However if this does not solve the issue and the small firm feels it has been unfairly treated, they could well feel obliged to start Debt collection proceedings and start to use their Debt collection software.
The heart of a Debt collection process is the use of Debt collection letters as these can put the small companys position into context with the legislation in force, but in a non-confrontational and certainly unemotional way. This will likely show that the small firm means business but is operating in an ethical and professional way. The Debt collection software needs to have either an on-line tutorial on the Debt collection process in general and Debt collection letters in particular, especially if the person assigned to use the Debt collection software has not been too involved in Debt collection in the past. A good suite of Debt collection software needs to be written around both the generating of Debt collection letters and also storing key events for the purpose of later providing evidence of the work that been done in the Debt collection process on this occasion. The reason for this is because if the large firm still does not pay the invoice then the small firm could need to take them to court and the court will want to see evidence of the small firm having made sufficient efforts to get the invoice paid before the case can be heard.
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