In the present financial downturn, cash flow for organisations may be an issue, in that if they are owed money for work or sales they will have to consider their options on Debt collection. Do they take it on by talking to the debtor company or do they employ the services of a solicitor to pursuefollow up the debtor for settlement. A Debt collection agency may offer curiously attractive deals for example no win no fee, but such agencies may assume that simply a paltry payment from the creditor is a win and so collect their fee, which may be calculated on the whole debt. Not all Debt collection agencies would work in this way, but would their web sites show this degree of detail and so give the creditor the information to carry out an informed decision? The other choice is to take on the Debt collection in house by using a Debt collection package, consisting of Debt collection software and Debt collection letters. Such packages can be obtained from under £50 and enterprises who offer typical packages would be expected to be able to give full details of what is in the package and maybe also some clue of the time required to work through the software for a general Debt collection process. The costs for a solicitor or a Debt collection agency are likely to be on a sliding scale and would generally be calculated from the debt amount, although a solicitor may charge a set fee for the first letter, any further Debt collection letters may be more expensive perhaps.

When using Debt collection software packages both the creditor and the Debt collection software should have knowledge of the Late Payment of Commercial Debts (Interest) Act 2002, which was first set up in November 1998 and amended in August 2002. This legislation permits a creditor to claim both a one-off payment and also interest payments as soon as an account becomes overdue. If the creditor has not referred to this act in the original contract with the debtor, there is nothing stopping them from applying the aforesaid charges. However it may bring in some concern from the debtor to be just shown a higher invoice and this may cause problems should the creditor later submit an application for a future contract with the debtor business. To try and save this from coming about it would be best for a creditor that hasn’t referred to the act to contact the debtor either by phone or by personal call and courteously inform them that the bill is late and they would not wish to have to apply the charges that they are permitted to do by the act.
If this fails to stir the debtor into payment, then the creditor will need to use the Debt collection software in earnest and write Debt collection letters, which should already be available in the Debt collection software as templates, ready to use when the debtor details are entered into the database. The creditor should be able to alter the Debt collection letters text to suit their situation or relationship with the debtor, but they must resist using emotional language as this will show them in an unprofessional light with the debtor. In this way it is hoped that the debtor will be persuaded to pay the bill and also settle up on time in the future.

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