The Best Way To Proceed with Debt Collection If The Direct Approach Has Been Unsuccesful To Bring Results?
posted in Bricks and Mortar Business |Where a business has completed a project for another business and has had the work signed off by the Project Manager and then sent in their bill only to later discover that the closing date for payment has passed and payment has not been collected, and they have not paid despite several phone calls. If the business carrying out the work is small then they may have contracted sub-contractors to take on key sections of the project, and these contractors will then find themselves in a chain of payment. Each of the parties concerned may have worked together many times and depend on this carefully formed supplier-client relationship to bring in a steady flow of money, so the last thing any of them wants to do is send bailiffs into the business which had the project work done in the first place.
The case of what is essentially the main contractor, which is the business that employed the sub-contractors, is one where they need to lead the Debt Collection process but in a way that has the least harmful effect on the working relationship they have both ways. The sub-contract business can only really pursue the main contractor, but as they hopefully have been kept up to date with the payment issues from the client business, it is in their interests to assist the main contractor rather than pursue them. The main contractor may well have limited funding with which to take care of this issue, not the least of which being finance, so they would need to find the most cost effective solution that has a good chance of completing the Debt Collection process to a agreeable end for everyone. Presently there seem to be three routes that can be taken to manage this: Debt Collection businesses, the legal system, and the Do It Yourself approach. Each of these routes has pros and cons that have to all be thought through before making the choice.
Each path offers different degrees of service at commensurate cost, varying from the DIY method needing local resource to execute the operations, then the Debt Collection company and lastly the legal system where the solicitor can handle the process with minimum time from the client.
The DIY path needs to include a suitable package of Debt Collection Software and a fully documented manual on how the Debt Collection process works, how to use the Debt Collection Software, in particular how to generate Debt Collection Letters, which are the papers that will be posted to the client business. These Debt Collection Letters are key to the process so must be checked carefully before beinbg despatched. The Debt Collection Software would also have the capability to handle user input such as logging operations like Debt Collection Letters being sent out, letters being received and then the capability to attach a scanned pdf file. The final result would be a system that would record and date & time stamp the operations that happened through the Debt Collection stages and could print a hard copy so that it could be passed over to a Debt Collection company or a solicitor, should this be the next step. The cost of the Debt Collection Software and instructions could possibly be below £100.
The Debt Collection company would take the report of what the main contractor had done and then assess what they could come up with, but largely, at this point it is improbable that they could exert any greater pressure than the main contractor had already done without the Debt Collection company themselves deciding that going to a solicitor was the next available step. What the main contractor must be confident of is that only ethical and legal processes are utilised otherwise that valuable business to business relationship may be violated irrevocably. The services of a Debt Collection company is likely to cost substantially more than the DIY method and be over £1000.
The solicitor would also use the records and work with the main contractor and if required, take the necessary steps to start court proceedings to recover the debt. By the time a case gets to court, the fees that will have built up at the finish of the case could easily be in the £100,000 plus region.
Based on cost alone and given that the right DIY method will employ known working practices, it must be worth it for a small main contractor to try as the next phase in the Debt Collection process.
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