Business Law - Debt Recovery

The recent economic crisis may have caused many companies to be faced with outstanding debts from a large number of their customers. Any debts not paid back on time can be a real problem and this can be servely catastrophic for small businesses that rely on a steady income on a monthly basis.

Business owners should take as many precautions as they possibly can to avoid having to deal with late paying customers. One of the first things that you should always consider is a way to avoid outstanding debts altogether by thoroughly check the credit of your customers to find out if they have a history of late payment. You should also ensure that you send off any invoices and reminders as quickly as possible. There should be an appropriate procedure put in place for any late paying customers, you should ensure that you set out clear dates on all of the invoices and reminders that you send out and explain the consequences of failing to pay on time. Most companies will give late payers 90 days to repay their debt before they take further action.

You should also keep a sharp eye out for certain traits that are usually common in customers who are trying to avoid payment. Common traits would include finding it difficult to get in contact with the customer, failing to hear anything back from letters you sent them, emails and phone calls, this is a common sign that the customer is trying to avoiding payment. Another trait to look out for is resistance when you discuss setting up a payment schedule. They may also break their promises as to when you will receive a payment. Another tactic used by customers who want to avoid payment is to complain about the services they have received or their contract. This is so they can attempt to have some leverage when resisting payment.

If you can identify customers who will cost you considerable debts quickly it will mean that you can save a lot of time, money and resources in chasing them for the repayment of their debts. If things do spiral out of control, you should always consider taking legal action, for example, employing a professional debt recovery firm to retrieve any money that is owed to you or employing a solicitor.

While debt collection agencies can be effective, they can also give your company a bad reputation if they use heavy handed or threatening tactics. It would be advisable to ensure that you choose a debt collection agency carefully so you have a chance of keeping the customer in the future.

Debt collection agencies will usually charge a flat fee and then a percentage of the debt that they are recovering. You should consider the costs carefully and weight it up against the debt you are chasing to see if it would be more cost effective to write off the debt completely.

Due to the risks of using a debt collection agency, the safer option can be to employ the services of a solicitor who will be able to chase the debt on your behalf.

I am a legal writer covering advice on topics of law including fraud, for further text and similar works visit business law or contact a solicitor today.

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