Debt recovery can be an effective method of recovering payment owed to you from bad debtors. So effective, in fact, that sometimes all it takes is a letter to the debtor advising that a debt recovery expert has been appointed to prompt them to pay up!
How it works
An invoice which is unpaid and overdue for more than 60 days is considered a bad debt. Debt recovery is not simply a letter to the debtor threatening legal action, it’s working with the debtor to secure payment in the quickest and most effective means possible.
Most recovery agents will attempt to resolve the issue by speaking directly with the customer and working with them to ensure payment is swift and in full.
Main advantages of debt recovery
- Time saving
By appointing a third party to manage these debts you can save valuable time and resources allowing you to focus on what’s important — growing your business.
- Specialist knowledge
Tried and tested methods of debt collection increase your chances of recovering your bad debts in full, and mean you don’t have to try everything under the sun to try and get paid.
Appointing a debt collection specialist is sometimes all that is required to prompt your bad debtors to paying up!
- Quick resolution
By having a third party involved, you can avoid the potentially awkward dispute and miscommunication between you and your debtor. This also lessens the likelihood of having to take anything to small claims court (which carries a cost).
- Cost effective
Decrease the amount of bad debt you need to write off each year by partnering with a debt collection agency who can work with you in securing your debts much quicker, avoiding long waits for payment.
- Build stronger payment relationships
Send out a clear message to other customers that late payment and bad debts will not be tolerated. Ultimately ensuring you’re top of the list of people to pay month in month out.
Recognise the signs of a bad debtor
It’s not always immediately clear that a customer is a bad debtor, or has the potential to become one. Some signs to watch out for include slow payments requiring chasing very month – this is often an indicator of cash flow issues, so keep an eye on customers like this in order to react quickly in case of their encountering financial difficulty.
Invoices returned as undeliverable mail and sudden radio silence as the customer becomes unavailable, or continual excuses for late payment, are also red flags.
Is debt recovery right for your business?
Your business could be suitable to use a debt recovery service if you:
- Provide goods or services to other businesses
- Have debts which are more than 60 days overdue
- The value of the outstanding debts are more than £1,000
While we don’t offer a debt collection service here at Touch, we do have knowledge of the industry and can point you in the direction of those who do in order to help you on your way to recovering money owed to you.
Give us a call or fill in a contact form and one of our consultants will be happy to talk through your options.