Every company is confronted with the problem of a client who won’t pay, and refuses to cooperate with any efforts to negotiate settlement. If you’re a new company, it could become the only time that you are confronted with the issue of late payment and have been forced to think about actions by a debt collection agency. even if yours is an established company Late payment may be a problem that you encounter so often that you are still unsure what the best solution is to deal with the problem and recover the amount owed.
Late payment or bad debt?
It’s crucial to understand that there is some reason for why you’ve not received payment. If the amount owed is not disputed, that reason is most likely to be that your client is in financial difficulty. If they’re unpaid, they will be unable to pay their suppliers as well and some of them will also be contemplating taking action to collect debt. It is essential to act quickly and the longer you spend repeating the process of sending mail, emails, and phone calls the less chance you stand in obtaining payment. If the initial letter failed, the third letter won’t be successful, meanwhile, another supplier could have instructed another third party to be paid.
You will have a credit control process and procedure you adhere to and must follow the time when a late payment becomes a debt. This must be based on historical payment data and industry-specific payment data. In certain industries and areas, the delay of payment for 60 or 90 days is not unusual, in the construction industry for example. It is best to establish a procedure of drawing lines in the sand which could be 30 days past terms or 45 days beyond terms or whatever is the point that late payments become debt and you have to immediately send the account to an unidentified third party for collection.
Debt collection solicitors
The letter of a lawyer is usually enough to convince the debtor to take action particularly if they’re threatened with court legal proceedings. The issue for solicitors is the price they charge, and you must take on a payment of as high as 20% on any monies that are recovered. There are solicitors that provide a letter-before-action service for just £2.00 However, these letters are designed to have no impact and are rarely leading to the payment you need, leaving the sole option of suing legal proceedings and paying solicitors’ fees for representation in Court. It is also worth considering the possibility of getting paid following the successful obtaining of an Order in Court. Solicitors will not thoroughly investigate the debtor’s financial situation and ability to pay, your judgment could be one of the 40 percent of CCJ’s which never get paid. You could have saved the money you’ve spent on legal fees.
Debt collection agencies
Before you make the decision to institute legal action, it’s worth instructing a debt collection agency in London. The majority of agencies now provide free collection service, therefore there’s no chance of avoiding this option prior to proceeding with legal action. Contact from a third-party debt collection practitioner, be it a paid solicitor or an agency operating on a no-success no commissions basis, can be enough to prompt the not wanting to pay debtors to pay. The amount may not be sufficient to recover payment from businesses or companies in financial distress and cannot pay. However, there is one of the advantages of hiring an agency for debt collection. The agency’s investigations into the financial condition of the debtor as well as future prospects for trading and ability to service the debt could result in an option to discharge the debt and seek tax relief instead of paying Court and solicitors fees when there is no likelihood of ever receiving the money.
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