When is the Right Time to Instruct a Commercial Debt Recovery Agency?

Chasing late payments or unpaid invoices can be a time-consuming process, especially if your debtor is not particularly forthcoming with their communication or willingness to pay. We often find that our clients recognise that they need some assistance but they’re not sure when is the right time to instruct a commercial debt recovery agency. There might be a number of warning signs, and we’ve highlighted a few of them here.

No Time or Resource:

Sometimes it’s as simple as a business not having enough time or the right in-house resources to chase debts and so they need professional help. This is particularly common if the creditor is a small or medium-sized business that outsources its accounting functions. A debt recovery agency is able to take on chasing payments, negotiations and legal proceedings (if necessary) on your behalf, enabling you the time to focus on running your business.

Refusing to Communicate or Cooperate:

A difficult situation that you might encounter, when trying to chase a payment yourself, is a breakdown in communication with your customer. If you are sending repeated reminders via email, letter or phone call and making no headway then you are losing valuable time that can be spent on other business tasks. By instructing a commercial debt recovery organisation, it sends a clear message to your debtors that you are taking their attempts not to pay seriously. It will also take the pressure off you as the chasing of payments will be done by the third-party. A debt recovery company can leverage stronger tactics to encourage your debtor to pay, such as a Letter Before Action, or undertaking legal proceedings on your behalf. 

Sometimes an organisation will have an entire department of staff who are responsible for making payments and it can be difficult to reach the right person when trying to resolve an unpaid invoice. A commercial debt recovery agency will use all of the tools at its disposal to discover the right point of contact within the organisation, another process that can take a huge amount of time and effort.

Negotiation:

If a customer simply just can’t pay the invoice then you usually need to enter a stage of negotiation to move forward. This could take many forms such as a payment plan or an extension of payments terms. If you are not experienced or confident with negotiating then a third-party debt recovery agency are able to step in and negotiate on your behalf, keeping you updated at each stage of the process. If you have not had to deal with this situation before, it could be tempting to accept the first offer or counter-offer given by your client to make sure that you at least get some money through the door. However, an experienced debt recovery agency will be able to analyse the situation for both parties and reach a satisfactory outcome. A good commercial debt recovery agency will be able to negotiate without damaging the existing relationship with your client, allowing you to continue to do business with your clients if you wish.

Missing Agreed Payment Dates:

If you were successful in communicating with your debtors yourself and they have agreed to pay their invoice within a set period of time, or you implemented a payment plan (we discuss if this is a good idea here) and the payments have not been made as promised then it could be time to hand the case over to a commercial debt collector. If you don’t keep on top of the payment plan and allow payments to slide then it sets a precedent with your debtor and they may feel as though they are able to bend the rules and delay payments further. By instructing a debt recovery agency to keep a close eye on the plan, they can ensure that payments are being made on time and also follow up any delays with reminders. 

As a general rule, it is always best to act sooner rather than later when instructing a debt recovery agency as there are specific time limits that define when a debt is no longer able to be collected. A debt becomes Statute Barred when it passes six years since the last payment towards the debt or acknowledgement of the debt was made. So it is important to keep all correspondence that relates to the payment in question on file as the burden of proof is on you, as the creditor.

If you have been considering instructing a commercial debt recovery company to help you with your collections process the contact My Debt Recovery today. Our experienced team have more than ten years of experience in commercial debt recovery and they have an incredibly high success rate. We operate a no collection, no fee policy and we’ll first work with you to analyse your debts/late payments and have an open and honest discussion about our anticipated rates of success for each case. Pick up the phone: 0800 009 6106 or drop us a line today.