Debt Collection & Recovery – The D Word!
There are very many cloud-based accounting packages available these days such as Xero, QuickBooks, and Sage. If used to their full potential, they can cover the full credit control escalation process and chasing cycle, all in-house.
The emphasis, of course, is on it being used to its full potential. The information you enter is what these systems will work with. If you were to enter a customer name wrongly or the invoicing address and/or the email address too, then it is not going to work.
It is therefore vital and well worth taking the time to ensure your processes and systems are in place. Many credit management firms offer support with this and full end-to-end process reviews.
It is important to understand that people start their own businesses usually because they are good at what they do however, you cannot be good at everything you will need in your business. It is not a weakness to ask for support or help, quite the opposite, it is a strength. The longer you are in business the more you will learn about working on your business as opposed to in it. Your time has a value and using it wisely makes a lot of difference to your business.
Referring a late-paying customer account to a third party should be a standard part of any process, not an ‘as and when’ occurrence.
Click below to download a FREE template document for customer account applications to use now:
There are several different ways that debt collection agencies’ (DCA) charge, some have a minimum debt amount, some will say “free debt recovery”, but is it really free? If the debtor pays the full debt plus interest, fees, and costs then you may not lose out. It is common however that not every debtor will pay the interest, fees, and costs, so be wary of this when reading through any terms and conditions. Note who pays for any litigious action if they do not pay the debt recovery firms costs.
Some DCA’s will charge an upfront subscription offering an agreed number of letters before action. Many will be reliant on you entering the information, again if you have not got the correct legal entity right then the demand will not be worth the price of the letterhead etc. What there can be little doubt about is that DCA’s that get paid on successful results have an incentive to recover the debt for you, they also want to do it well so you will recommend them.
Picking the right debt collection agency
‘Recommendations’ lead us onto how you choose a good DCA. Whilst many will have recommendations on a website, you could also look at Google reviews or ask on a site such as LinkedIn where your contacts will recommend firms they have used.
The benefit of using a DCA can be significant, they can give you an informed opinion based on experience as to your debtor’s ability to pay. They should check that you have ‘everything in order’ in the event that you need to go to court. Payment plans and settlement agreements can be administered correctly, disputes discovered and resolved, avoiding litigation, the debt recovery process when done correctly will save you money and time.
NOT needing to worry about debt collection is the best remedy – proper credit checking, bookkeeping procedures, correct terms and constant communication are all part of the mix. BUT, a professional debt collection agency can add to this mix and support your cashflow when things go wrong.
Straight talking advice on Debt Collection procedures – Yorkshire Powerhouse
Now you’ve read our article on debt collection – have you any more questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
There are a few common issues in credit management. Knowing what these issues are can help to make sure you get paid in a timely fashion for your work. Read >