Business Debt Collection Guide

If you have customers who pay late, staying up to date with them is essential for a business to be successful. Late payments can cause multiple problems and there has been a lot of research on that. Nowadays it is especially important, with the economic effects of the coronavirus still prominent and rising living costs across the board, businesses are already struggling without the extra stress of late or missing payments. If you need help with business debt consolidation contact Debt Collection Solicitors Chester & Shrewsbury (aaronandpartners.com) today.

How to minimize late payments

You can minimize late payments but the idea of ​​avoiding them altogether is unrealistic. Below is advice on what you can do to take control of your credit:

1) Make sure there is a clear procedure for credit control

• When a payment becomes late, issue a week-long request for payment
• Make a call after this if you don’t get a response there may be a problem with your invoice
• When your credit control period is over give the debt to a solicitor for debt collection as soon as possible.

2) Collect your customer information and focus on features

• Who are you working with? Who are you working with? Find out details information as much as you can about him
• Where possible check customers credit

3) Set conditions consciously

• Make sure the terms of payment are included in your conditions
• Ensure you have an agreement or signed form in your records

Maintain good relationship with customers

Trying to maintain a positive relationship with your client or customer can be difficult when dealing with late or missing payments. One way you can depersonalize the situation is to instruct external professionals to collect the debt on your behalf. You can let debtors know that deciding to proceed with legal action was not personal action and not fully within your control. There are situations where your insurance requires you to take legal action to gather invoices that haven’t been paid after a month.

In the majority of cases, this won’t negatively impact your business relationship. However, if delayed payments continue, it could be worth considering whether you want them as a customer or not.

Insolvency

An alternative option to issuing a County Court Claim is to start insolvency action. This is possible where:

• The debtor is a company, and the value of the debt is over £750
• The debtor is an individual and the debt value is more than £5,000
• The debtor is located in England or Wales
• There isn’t a known dispute over the unpaid debt

The first step in insolvency procedure is to provide the debtor with a statutory demand for payment. This will give the debtor 21 days to make the payment and warn them that failing to do so will mean you will issue a winding-up (company) or bankruptcy (individual) petition.