Debt collection has rarely been as important for small businesses as it is in 2018. As an increasing number of customers and clients default on payments, businesses of all sizes have to resort to ever more drastic methods to ensure they receive their cash.
There are a variety of means by which businesses can attempt to collect debts. Much of the work can be done in-house, as a reminder letter is frequently all that is needed to make a client pay up. However, in more severe circumstances you may have to consider taking further action. As experienced debt collection agents, Cobra Financial Solutions say don’t delay in getting your debts settled, the longer you leave it, the harder it will be to recoup!
When is a payment considered late?
Most business sectors have standard, established payment terms. For example, invoices might be expected to be settled within 30-45 days of the date on which they are received. Some companies give their clients up to 60 days to settle their accounts.
However, in cases in which there is no written agreement concerning the payment period, a payment is considered to be late under law when the invoice has aged for 30 days, or when 30 days have elapsed after the date of the delivery of goods – whichever is later.
It is perfectly legal to set a payment term shorter than 30 days, but this must be agreed upon in advance. For example, many companies insist on payment on delivery of goods or services. But, regardless of the payment terms you set, you cannot take any further action to get your invoices settled until the agreed payment period has expired.
After that point, there are a variety of options from which you can choose.
Debt collection- the DIY way
A reminder letter or phone call is frequently all that is required to get your client to settle their invoice. In the majority of cases the client will simply have forgotten to pay the bill, and will do so when reminded. In other cases they may be trying their luck, hoping that you have forgotten. Either way, a letter followed by a phone call is often enough to get your money.
If your invoice remains unpaid after a few attempts at contact, you should consider escalating the dispute by seeking some professional assistance. Depending on the size of the debt, this may or may not be a viable option – obviously, if the value of the invoice is less than the cost of recovering it, it is probably not worth trying to get your money back via a third party.
However, if you are trying to recover a fairly large invoice, you might consider one of the following methods:
- Engaging a solicitor
- Hiring a debt collection agency
- Beginning court proceedings
Professional debt collection services for small businesses
Engaging a solicitor can be amongst one of the most expensive means of debt collection. Solicitors will be able to draft and send legally sound letters threatening further action in the event that the invoice is not settled. This type of letter will carry significantly more weight than one from your company, and will often result in miraculously prompt payment.
You should make sure that you agree a set fee in advance of a solicitor doing this work, unless you already have one on retainer. Bear in mind that the work involved for them is negligible; you are paying for their headed notepaper more than anything else.
The next step is to hire a debt collection agency. There are a number of important advantages to be considered here. Debt collection agencies can be a quick method of recovering your cash. By their nature debt collection agencies are likely to be more forceful than you, and the threat of having their company wound down or credit record sullied will be enough to get all but the most intransigent customers to pay up. Wherever you are based in the UK, Cobra Financial Solutions are here to help small businesses get back what is rightfully yours.
So, whether your invoice is 1 day, 1 day or 4+ months overdue, get in touch with our experienced and knowledgeable debt collection agents here who will get to work straight away to recover your B2B debt.