Organisation To Organisation Debt collection Strategies And Does The Law Help?
Posted by Foreclosure Prevention in FinanceWhen a small business has posted their invoice for projects done or equipment supplied to a larger business and then realise that it has not been closed after the agreed last payment date, they could wonder if there is anything in the legal system that can aid them. For business debts such as this, there is the “Late Payment of Commercial Debts (Interest) Act 2002”, which sets out one time payments and daily interest that the small business is permitted to charge on the late debt. This legislation is only applied when the contract, agreed between both organisations, does not include a late payment clause, if it does, then the legislation cannot be applied as well. The small business has the choice of applying the charges or not however the large business cannot opt out of the late payment legislation.
If the small business needs to keep working or supplying equipment to the large business then before applying any charges they should tell the large business what they are proposing to do. In addition it is better to send a revised invoice displaying the charges being made so that it is clear what is being charged for. If using[/spin] the legislation does not prompt payment by the large business then the small business could see it as appropriate to begin Debt collection proceedings. This can be done by several ways; a Debt collection business, which has expeience in commercial Debt collection, or a solicitor with similar experience, or even to purchase of a Debt collection software package and keep the Debt collection operation in-house.
Carrying out the Debt collection operation internally can not only save revenue, but also allow the small business to control the Debt collection operation. To enable them to do this effectively the Debt collection software should contain documentation which explains the Debt collection operation in detail and most importantly, how to compose convincing Debt collection letters. The small business will also need to allocate sufficient resources if this route is to work and so competent workers should be picked, perhaps two or more so that there is cover in the event or holidays, sickness or other absence. Computer literacy would be an important requirement and also a good standard of English in order to compose good quality Debt collection letters. The Debt collection software should be able to lead the user along the Debt collection operation and display to them how to compose Debt collection letters suitable for different steps of the operation. A good way of doing this would be to include a suite of samples of Debt collection letters so that the user has a starting point from which they can compose the real Debt collection letters to suit the large business details, which will be essential if the Debt collection letters are to be taken seriously.
A really good benefit of Debt collection software is that once bought it can be reused for any debts that come up in the future and the small business only has to pay for printer consumables, stationery and postal costs. It the small business was to use a solicitor or Debt collection business then they could well be asked for 10% or more of the debt for the service, but this would be required for any future debts as well, so making these rather expensive strategies.
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