In the UK there are many rules and regulations that businesses have to follow to recover commercial debt, or any debt at all. The debt recovery act is there to ensure that those who are owed money are able to follow a process which protects them and their debtors.
If you are a business in the UK, it is essential to understand the debt recovery act and the processes around it. While all business owners hope to never find themselves in debt or seek assistance for debt recovery, it is important to know what you need to do as and when the time comes.
What is the debt recovery act?
The debt recovery act is a set of laws and regulations that are in place to ensure the safety of debtors as well as those who are owed money. This ensures that both parties remain protected under the law, and there is a process for ensuring that debts are recovered successfully while ensuring fair treatment of all involved.
The debt recovery process can be difficult for all involved, which is why having clear rules and guidelines for businesses and debt recovery agents to follow is essential. Examples of these rules are:
• Debtors should always be given fair notice of their debt and provided with clear information about how debts can be paid.
• All communication between the debtor and creditor must remain courteous, professional and in line with current legislation.
• Creditors cannot take any steps which may cause undue distress to the debtor
What are debt recovery measures for businesses?
There are various measures that businesses can take to recover debt, whether it is due to unpaid invoices or missed payments from financial agreements. The various measures include sending out reminders, issuing letters of demand, or even taking legal action in more severe cases. It is important to note that all strategies should comply with the debt recovery act and any applicable regulations.
The most common debt recovery solutions are as follows:
1. Sending Reminders – This is a simple yet effective way for businesses to remind debtors of the amount they owe and when it is due. It can be done through emails, text messages or traditional mailers.
2. Letters of Demand – This involves sending a formal letter to a debtor firmly requesting repayment in a specific time frame. If the request is not met then legal action will be taken.
3. Legal Action – Pursuing legal action is the last resort for businesses to recover debt and should only be done in extreme cases or when all other solutions have failed. Depending on the type of debt, businesses can take out a court order or issue a statutory demand against the debtor.
How does GDPR come into debt collection practices?
To protect personal data within the EU, a set of regulations called the General Data Protection Regulation (GDPR) has been established. Businesses need to follow these regulations when collecting or storing the personal information of debtors. Not complying with GDPR can result in severe penalties and fines.
However, one misconception is you are unable to pass information to 3rd parties such as debt collection agents. This is incorrect as you are using the information and data for legitimate business purposes.
Following all guidelines can help businesses recover debts safely and responsibly without any risk or additional hassle.
Contact My Debt Recovery for assistance with claiming unpaid invoices or monies owed to your business.