In the current economic climate it would seem crucial that all Entities are efficient in Debt collection from clients on time, but surely this is more serious for a small Business with their own bills to pay, on time. If the client is behind in paying they may feel it best to use a Debt collection agency, which could send out Debt collection letters for them, or the small Business may look for some DIY process, perhaps from a Organisation who can give them some Debt collection software that may generate the Debt collection letters for them.

In times where a small Business has insufficient funds to meet its own debts then Debt collection of outstanding payments from its debtors become very necessary in the fight to stay solvent. In many cases the first course of action would be to contact their debtors and remind them of the invoice due date, this would usually be a part of the terms and conditions of any contract for the supply of goods or services.
Should this action fail to produce the required outcome the small Business may think that they have limited courses of action available with which to chase a bad payer, such as the courts or a choice of Debt collection agencies. The Small Claims Court is limited to claims of ?5000 or less and each party must cover their own costs. Higher sums are handled by the County Court or Crown Court and require proper legal representation with appropriate costs, where the victor can be awarded their costs to be unpaid invoices without going to court, but it is in the best interest of the small Business to ensure that if they take this action then they take on the services of a fair Debt collection company for the work, otherwise their own business standing may be tainted at the very least if fair Debt collection practices are not used. Fair Debt collection practice includes posting Debt collection letters to the Business owing the money, rather than just sending in the bailiffs right away. Fair Debt collection agencies will most likely offer a no win, no fee service, but you would normally have to get in touch first to know about their fees. The initial contact in itself should be free but the client should find out about the total fees before embarking on using the preferred fair Debt collection agency to chase the debtor for their payment.

However the small Business may not know that they can take direct action themselves, for a small charge that they could get their invoices paid quickly. If they could find out how to do this with the minimum charge and effort required from themselves, surely this would be at least worth a try as a first step in trying to recover the debt. There are obviously risks involved in taking this action to Debt collection, not least of which is that a resolute non-payer might just see a letter from the small Business as not worth bothering about and simply ignore it, or possibly worse, phone and make an empty promise of some payment. However, it would seem that any small Business involved in a legitimate activity would be unlucky to meet with a high percentage of bad debtors and so the DIY approach, with the right tools may well bear fruit. Debt collection software could also help in making this process work better for the client, for example in production of tailored Debt collection letters and recording details of what has been done.

The solution would depend on many things, for example the client’s payment history, but the most cost effective method would be the DIY approach to start with, leaving the Debt collection agencies for more troublesome debts perhaps.