These can be bad times for small organisations trying to make it during the financial climate even though the government says it is trying to assist small organisations. The finance houses have been pressurised to assist small organisations with money but currently this has not been forthcoming, unlike the bonuses paid to top bankers. Given this situation, when a small organisation finds that an account sent to a large organisation for which it has done work or furnished products, has now gone past the final completion date and is still outstanding. The small organisation might have bills of its own to close, maybe tax bills and the last thing a small organisation wants is to get in the tax man’s bad books, for the spectre of the grim reaper with a winding up notice may be the stuff of nightmares. I hope that referring to “tax man” in the previous sentence does not offend the ladies for I am probable that there are many female tax inspectors who may be only too pleased to use any tactics to get the revenue money.

The small organisation might well be tight on funds or if they have previously used legal practices or Debt Collection agencies, they might be reluctant to pay the fees they charge, even if they are taken as a sacrifice from the final settlement. Even if the legal practices or Debt Collection agencies have talent in business to business Debt Collection and their success rate is good, the fees remain the same.

For such a small organisation an answer exists but only if they are prepared to put some time in themselves, the answer might be Debt Collection Software. For an outlay of less than £100 the small organisation can get a good Debt Collection Software suite and for their part they will need to assign sufficient resources to give the Debt Collection project a chance to work. There will be a cost in time and effort in finding out about the Debt Collection activity but the Debt Collection Software should come along with a user guide that should provide this information, especially any current legislation that the small organisation can use. The important part of Debt Collection is that the large organisation needs to realise that the small organisation needs to have their account paid and says this in an unemotional and professional manner. This is achieved by writing Debt Collection Letters, which form the heart of the Debt Collection activity and the Debt Collection Software should have a good training module in how to compose good quality Debt Collection Letters. The Debt Collection Software should also provide a set of examples which should show what the small organisation should compose for each stage of the Debt Collection activity. The small organisation could use these examples as the basis for their actual Debt Collection Letters as they work their way through the Debt Collection activity. The small organisation should have access to update the examples to include their own organisation details and icons as required as this would add to the professional look of the real Debt Collection Letters.

It should be possible, by use of the Debt Collection Software, to compose good Debt Collection Letters that should persuade the large organisation to pay the account and keep up the good professional relationship that they have with the small organisation.

A recent report from the Institute of Directors has uncovered that despite some £850bn being pushed into the economy and financial institutions being instructed to start lending to companies by the Chancellor of the Exchequer, over 50% of companies seeking business loans were turned down by their financial institutions. This situation can put small companies into a difficult position as it is without the extra load of late accounts with larger companies. The future of the small companies can depend on good professional relationships with the larger companies, so providing a flow of work to keep the small companies afloat. Therefore it is in the best interests of the small companies to try and keep this relationship alive, as it can take a serious commitment to build up a positive professional relationship but may take only one or two bad incidents to tarnish it.

Thus the small organisation must try and reach a balance between getting the large organisation to pay the invoice in a way which should be neither arrogant nor emotional and certainly not threatening. The small organisation may well have their own accounts to pay and therefore may not have much cash to call on to spend on Debt collection, so is there an alternative tosolicitors or Debt collection organisations? Debt collection software is one alternative which has important advantages, both in cost and in the control of the Debt collection procedure. After having got in touch with the larger organisation, the small organisation may find that they are not having any success in getting the invoice paid and so may feel that they ought to initiate the Debt collection procedure. If they choose to go for Debt collection software then they will have to carefully investigate the various packages, since the writing of Debt collection letters is at the core of the Debt collection procedure, the small organisation may well need lots of directing in this aspect. A good Debt collection software package should provide a tutorial of the Debt collection procedure and also instructions on how to write convincing Debt collection letters, what legislation can be used and what to say and what not to say. In order to make this procedure easier, the Debt collection software package should include examples of Debt collection letters, for each level of the Debt collection procedure so that the small organisation will have a good start in writing the crucial Debt collection letters.

While the initial cost of Debt collection software can most likely be under £100, the small organisation must be aware that they will need to assign internal resources to cover both the operation of the Debt collection procedure and the writing of good Debt collection letters, they will also need to think about potential absence of key personnel and to cover this it may be best to have two or more workers trained to write Debt collection letters and operate the Debt collection software. Consideration will also have to be given to the computer the Debt collection software will operate on since there may be hardware or software needs that cannot be met from the existing computers of the small organisation. Finally those personnel who will be writing the Debt collection letters will need a good command of English, since any grammatical or spelling mistakes can put the small organisation in a bad light with the large organisation. With good Debt collection letters it is probable that the large organisation will clear the invoice and bring the Debt collection procedure to a successful conclusion. The small organisation has made a minimal investment in Debt collection software which can be reused for future debts with only small running costs to see to.

They say that prevention is better than cure, so in this context it is better if the small firm and large firm have agreed a late payment clause in their contracts, so that both parties are aware of the results of delaying payments till after the final date for payment. But if such a clause is not present in the contract then at least for the small firm, help is at hand in the form of the “Late Payment of Commercial Debts (Interest) Act 2002”. This legislation firstly defines a date by which the bill should be paid as 30 days from presentation of the bill for services provided, or 30 days from delivery in the case of the supply of items. The small firm has the legal right to charge a single fee as some repayment for the Debt collection activity carried out and also to charge daily interest on the unpaid debt balance. The rate of interest is governed by the date by which the debt is overdue, where debts that become overdue between January 1st and June 30th the rate is 8% over the Bank of England base rate as on December 31st of the previous year. For debts that become overdue between July 1st and December 31st, the rate is 8% over the base rate on June 30th. The single fee is fixed and is set by the value of the debt as follows:

For debts less than £1000, the charge is £40
£1000 to less than £10,000, the charge is £70
£10,000 and over, the charge is £100

This fee is permitted to be only be charged once for a given debt, and it must be made clear that both of the charges that can be claimed from the legislation are by choice. The legislation also says that if the contract between small firm and large firm does contain a late payments clause then the legislation does not apply, provided that the clause provides sufficient recompense for the small firm.

Where a solid working relationship exists and the small firm does not want to risk losing future projects from the larger firm, they would be advised to contact the large firm first and try and ascertain why the bill remains unpaid, only using the legislationif they do not get a satisfactory answer. Before they do apply the charges they are best seeking advice, either paying for it by going to see a solicitor, or getting it for free from Business Link so that the small firm can have confidence in what to do next.

The next steps to take in case the bill remains unpaid, even in part come down to three choices in reality; a solicitor who has talen in Debt collection, an established Debt collection organisation and Debt collection software where by the small firm takes the Debt collection activity in house. Whichever route is chosen there may well be some chance of success in getting the bill paid, via Debt collection letters, but the first two choices come with fees that may be significant, whereas Debt collection software can come in at under £100. The Debt collection software packages must be evaluated to check that they have the right modules and content, such as marking of key events, production of meaningful reports and most important of all, easy ways of writing good Debt collection letters, which are at the centre of the Debt collection activity and also in keeping the professional and ethical standing of the small firm. The Debt collection software should provide examples or templates for the user to use to composetheir specific Debt collection letters and also there should be explanation of the legislation and how the Debt collection activity works in practice.

Debt collection may not be the first thing that a small company could consider when a large company, which they have worked with many times, has left the latest account unsettled past the agreed final date. Their main thought may be to get in touch with the large company and discover what has happened, in the hope that it is just a simple issue that can be sorted out quickly. In this economic downturn, the large company may itself be waiting for payment on overdue accounts of its own and so may be suffering cash flow problems. If this is the case then depending on the cash flow situation of the small company they may take a supportive stance and allow more time for the large company to pay the account. However, if the contract contains late payment sections then the small company may feel obliged to invoke these, especially if their cash flow situation is not too healthy.

If the small company needs to invoke Debt collection procedures, then they need to consider the cost against the various paths, where a solicitor who has expertise in Debt collection, as well as a Debt collection organisation are very likely to base their charge on a percentage of the debt and this may work out as a large amount in comparison to a cheaper strategy of Debt collection. Debt collection software can be purchased for below £100 and can provide ample guidance on how to write good Debt collection letters, accounting for the legislation in place at the time of release. It will be for the small company to consider the effect of a contract however. Debt collection letters form the centre of the Debt collection process and the Debt collection software should come with not only information but also samples that cover each stage of the Debt collection process. In this way the small company has a starting point when writing their own Debt collection letters and so should be able to manipulate them to relate to the large company and the debt involved.

The worker or employees from the small company who get allocated to run with the Debt collection software will have to have a good command of English and the ability, when writing Debt collection letters, to refrain from emotional language as this may well put the small company in a bad light with the large company and impede the Debt collection process. It could be better for the small company to have more than one worker allocated to the Debt collection software in case of holidays, sickness or any other absence in this way they will be able to manage any future debts at any time. Also this should improve the quality of Debt collection letters as they should be checked over before being sent out, since any silly mistakes could be as damaging as emotional language.

So, for an investment of some £100 or less, a small company can have the tools to write Debt collection letters and the advantage is that once purchased, they can use the Debt collection software for future Debt collection with minimal extra outlay.

When a small company that has been supplying goods to a large company on a regular basis discovers that the latest bill has not been settled on time and is overdue, the accepted strategies of following up this debt may be to consult a solicitor, preferably one who specialises in Debt collection, or to take on a Debt collection agency and let them take on the Debt collection on the small company’s behalf. However by taking a strategy like this straight away the small company might put the business relationship they have built up with the large company at risk and might not only lose future orders but might damage their status in the wider business community. Even so, they ought to make some attempt to contact the large company and make them aware of the unsettled bill and emphasise what it means to the small company. If this fails to get the large company to pay the bill then the small company will need to examine what choices are available to them apart from the accepted choices as mentioned earlier. There is in reality only one viable alternative, Debt collection software, which the small company can purchase, own and reuse as many times as they have to, should future Debt collection come about.

They will have to carefully examine the market offerings for Debt collection software and see if they can get a balance between price and functionality. In general, the minimum functionality the small company should be looking for are; the ability to compose convincing Debt collection letters and the ability to store happenings related to the debt in a database, time stamping each action so as to provide a record of what was done by the small company in the Debt collection operation.

The Debt collection letters are at the heart of the Debt collection operation and must be carefully written if they are to be effective in the Debt collection operation. The Debt collection software needs to provide guidance in creating the Debt collection letters, either by a well written tutorial that takes the user through the operation and explains what they are best putting in the Debt collection letters. In this way the user will be made aware of the ways of building up the Debt collection letters, as well as pointing out the importance of good grammar and spelling. An alternative to a comprehensive tutorial might be the provision of electronic templates for the Debt collection letters, which the user could use as a basis for their own Debt collection letters. In this context the record keeping function of the Debt collection software could provide useful in allowing the user to bring in details of the debt for placing in the Debt collection letters, such as the large company details and the debt value, which might assist in preventing transcription errors that could occur from keying these from a paper document.

By the use of appropriate Debt collection software the small company needs to have a good chance of getting the large company to settle the bill without losing credibility and keeping future orders. The recording of happenings by the Debt collection software will be useful in case the large company fails to settle the bill and the small company decides to take them to court, as this record will show that the small company has made strong efforts in the Debt collection operation already.