Prevention is obviously better than a cure, so, managing your invoices and keeping on top of your credit control is key to staying afloat in a difficult market. Having the right invoice management process in place from the outset will allow you to maximise the monies which are rightly owed to you. It will also help you run an efficient business without damaging your customer relationships. The most satisfying solution to recovering overdue monies is swift action, which gives you every chance of getting your money back at the lowest cost.
When in a debt recovery situation, many businesses find it hard to chase the customer as the attempt to recover money might be seen as aggressive. The best way to avoid this is to remind your customers of your payment terms. But if you do find yourself in a debt recovery situation, it is important not to lose sight of the fact that the customer has failed to pay you the money they owe. You can’t afford this issue to jeopardise the financial stability of your own business.
The first step towards recouping outstanding debts is to ensure that your terms and conditions are clear regarding payment. If you are going to use an external company to collect overdue payments, make your intentions clear to customers so there are no misunderstandings.
As the payment terms near their end, a friendly phone call can often result in payment. If not, you have the option to follow up in writing to instigate a gentle reminder of the outstanding payment due and to re-emphasise your payment terms.
According to David Green, director of Positive Collections: “As a business, you need to efficiently manage your invoices so that you don’t get to a debt recovery situation. If you do get to this point, you have to avoid making continual phone calls and sending debt chasing letters. This wastes your time and stops you from concentrating on the most important thing – running your business. It all comes down to being efficient to save you time and money.”
Positive Collections, which works with MTA Solicitors LLP, aims to help consumers and businesses of all sizes combat the issue of late payments and debt collection. Users are able to upload invoices and use the credit control system for free before, if necessary, recovering debts ethically and inexpensively from as little as £10.
The new online credit control service allows businesses to keep track of their payment terms with helpful email reminders. If payment goes beyond the stated terms, the invoice can then be transferred over to the debt recovery service.
Green continues: “The fact that so many businesses in the UK have become accepting of this ‘late payment culture’ is certainly a cause for concern as this has implications on the whole business community and economy. It is the smaller businesses that take the strain and, in the worst case scenario, have to fold.”
Positive Collections streamlines the credit control and debt recovery process using a step-by-step automated approach, ensuring the user is always in control. Any fees are fixed to a minimum cost and are never incurred without prior agreement from the user.
The debt recovery process works by automatically sending a series of up to four letters, costing a total of £40. If payment has still not been received it will instruct MTA Solicitors LLP to act on its behalf.
“Debt Recovery can become very complicated and expensive so if and when it comes to it, ensure that you choose a debt recovery process that is right for your business, doesn’t sour relationships, or generate costs you don’t expect.” Green warns.
Legal action has rarely been an option for smaller businesses due to the costs associated with it. Using a cost effective service, which is linked to a solicitors firm, will mean that you are in a good position to handle the case if it does reach the litigation stage. Of course using an effective credit control system in the first place has got to be the best way forward.
Catherine Greenwood is head of PR and marketing at MTA Solicitors.
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