A recession can affect businesses in different ways, for some it can force them out of business, some can continue virtually as normal, such as the banks including those that were rescued by the country, whilst most likely the majority can keep afloat but see that they have poor sales, larger supplies prices and perhaps late payers and/or bad debts.
For this last group, managing the income is vital and the skill to handle Debt collection efficiently may be the difference between survival and failure. There would appear to be three main options for Debt collection: solicitor, Debt collection organisation and do it yourself.
When considering how to handle late payers, the businesses that are feeling the effects of the recession need to consider if they want to keep hold of the customer for their products or services concerned or can they afford to do no more work from them. The latter option should be taken not emotionally because it could turn out that the creditor firm ends up with their good name tainted in the process. This question is important as it can affect the approach that is used in Debt collection, because, if the Debt collection organisation approach is used then they must be sure that the organisation is registered with the Credit Services Association (CSA) as this shows that they are licensed by the Office of Fair Trading (OFT) to practice. This is not often clear from some web sites, but it can be checked out at the OFT and if there is a difficulty then that Debt collection organisation should be avoided. They may have been refused a licence or had it withdrawn for using unethical practices when trying to recover debts, which would most probably have a harmful effect on the creditor’s reputation.
Where a organisation has late payers but wants to retain their people then they need to use an economical option for Debt collection and this is where the DIY option comes into the frame, as with this option they are in in the driving seat of what is done in the writing of Debt collection letters to be sure that not only ethical wording is used, but also courteous and unemotional wording. The best option would be to try and obtain a package of Debt collection software along with a user guide on the subject from the same supplier, so that the software should compliment the user guide and vice versa. A good Debt collection software system ought to include templates for the Debt collection letters that are carefully composed for each of the component parts in the Debt collection approach, which should be fully explained in the user guide. Likewise the Debt collection software should be able to record what activities a user has carried out so that it can provide a record for use by a solicitor in case the debtor has failed to respond to the DIY Debt collection approach and they have to be taken to court.
If the creditor does need to take on a solicitor then that person will need to be sure that the creditor has taken sufficient attempts to get the debtor to pay up, even if it is just a part payment for now, before they would take the legal route. As noted earlier, a good package of Debt collection software should be designed around this legal route being opted for at some point in the Debt collection approach and so it should be able to accept inputs for all key activities and then produce an acceptable output.
It is hoped that most debtors would pay the debt during the DIY Debt collection approach and the legal step would only be needed for those who were still in business but stubborn.