Business debt collection is a specialist field. It involves the chasing and recovering of unpaid invoices between businesses. Many businesses send invoices each day. These invoices will all have terms from upfront payment to 30/60/90 days and beyond. These terms are commonly governed by an acceptable timescale for the person providing goods or services.
Often, invoices can go unpaid due to being forgotten about, challenged, or because people decide not to pay.
At this point a company will have questions to ask:
- Is my client going to pay?
- How long are they going to take?
- Do I have the time to chase the invoices myself?
- What do I do if they refuse to pay?
If you are unsure at this point whether payment is likely, you may require assistance. This is where a business debt collection specialist can help.
What will a commercial debt collection agency do?
Unlike consumer debt (credit card repayment, parking charges, gym memberships), commercial focussed debt recovery has several legal tools to secure payment. Agencies have additional tactics and resources to benefit you as a business owner.
Because businesses are on equal legal footing, having evidence of a debt puts you in a strong position. Even if disputed, a debt recovery agency can enforce a recognised debt.
Late payment of commercial debts act
This is the basic framework for repayment of debt. If you have a contract agreeing to a date for payment, the law supports you. Basic contract law ensures that a contract signed by both parties in which goods and services are supplied in exchange for “consideration”, is legally binding. Consideration is commonly, money.
The act also details extra factors resulting from late payment. One such factor is interest. If money is not passed to you, you are missing out on potential interest accrued while still outstanding. Business owners can add this to a claim and recover the debt value, plus interest.
It also allows for costs incurred trying to recover the debt. If your client has broken the agreed terms and is not cooperating, engaging a debt recovery agency is a logical step. Any reasonable costs that a debt recovery agency charges, therefore, can be added to the debt also.
Reminders & pressure
Taking time to dedicate to chasing invoices is unproductive. It is money that should already have been paid. Taking your own time to recover these takes resource away from your main processes. It costs time which could be spent elsewhere and causes more frustration as time passes.
Engaging with an agency provides the external safety net of knowing it is being handled. Calls, letters, texts, emails and if necessary, more actions will be taken on your behalf. This contact once started, will regularly continue until resolution. Contact is often backed up with evidence and supporting legislation.
With financial matters “the squeaky wheel gets the grease” is a very apt statement. Your debtor needs to know you care about repayment. If asking them yourself doesn’t work, engaging a third party shows your intent. It adds more pressure and an escalation for your debt. It tells your debtor you are prepared to take matters higher. Recovering debt is all about leverage and communication. Telling a debtor you have sought assistance is a positive move for any creditor. It adds the leverage of an experienced, dedicated team to handle the matter.
A part of your team
International data suggests the longer you wait to recover money, the less likely you will succeed. Harnessing business debt collectors as a part of your regular credit control procedures can stop that wait time stretching further and further. With stats showing only 70% of receivables recovered over 3 months old, dropping to below 22% after a year, it pays to stop the issue early.
Business debt recovery will shore up your cashflow, provide advice and be your support network for outstanding financial matters. Not everybody who misses a payment means to, but it is important to remind people early. Employing a business debt recovery agency leaves time to focus on what makes your business great.
If you are pondering whether to get in touch with an agency, ask yourself one question:
How much is my time worth?
If it is more than the time spent chasing payment, you may benefit from a helping hand. To speak to a specialist debt adviser, you can call 0800 130 3357 or email enquiries@ayom.co.uk. We provide a full suite of debt recovery services and have a track record of success. Speak to our award-winning team today and find a positive resolution to your debt matters.