Oct 9 2010
Firm To Firm Debt collection Strategies And Does The Government Help?
When a small company has sent their account for work done or equipment supplied to a larger company and then find that it has not been closed after the agreed final payment date, they might wonder if there is anything in the legislation that can aid them. For business debts such as this, there is the “Late Payment of Commercial Debts (Interest) Act 2002”, which details one time payments and daily interest that the small company can charge on the outstanding debt. This act is only applied when the contract, agreed between both enterprises, does not include a late payment paragraph, if it does, then the act cannot be applied as well. The small company has the choice of applying the charges or not however the large company cannot opt out of the late payment act.
If the small company needs to keep working or supplying equipment to the large company then before applying any charges they should notify the large company what they are proposing to do. In addition it is good to send a revised account displaying the charges being made so that it is clear what is being charged for. If using[/spin] the act does not prompt payment by the large company then the small company might see it as appropriate to launch Debt collection proceedings. This can be done by several ways; a Debt collection agency, which is experienced in commercial Debt collection, or a solicitor with similar talent, or even to purchase of a Debt collection software package and keep the Debt collection procedure to themselves.
Performing the Debt collection procedure themselves can not only save cash, but also allow the small company to control the Debt collection procedure. To enable them to do this professionally the Debt collection software should contain documentation which explains the Debt collection procedure in detail and most importantly, how to write convincing Debt collection letters. The small company will also need to allocate adequate resources if this method is to work and so competent members of staff should be picked, perhaps two or more so that there is coverage in the event or holidays, sickness or other absence. Computer literacy would be an important requirement and also a good standard of English in order to write good quality Debt collection letters. The Debt collection software should be able to direct the user along the Debt collection procedure and illustrate to them how to write Debt collection letters correct for different stages of the procedure. A good way of doing this would be to provide a suite of samples of Debt collection letters so that the user has a starting point from which they can customise the real Debt collection letters to suit the large company details, which will be essential if the Debt collection letters are to be taken seriously.
A really good benefit of Debt collection software is that once obtained it can be reused for any debts that come up in the future and the small company only has to pay for printer consumables, stationery and postal costs. It the small company was to use a solicitor or Debt collection agency then they might well be charged 10% or more of the debt for the service, but this would be charged for any future debts as well, so making these rather expensive strategies.
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