How To Recover Business Debt In Any Industry
Recovering business debt requires a certain set of skills and credit controllers are in high demand given the steep rise in commercial debt owed to SMEs in the UK.
Some good news is that the approach to business debt recovery is practically identical across all industries.
If you have outstanding business debts to recover read on as we explain the steps you should take to recover what you are owed.
Why business debt is a problem
Most businesses will be able to operate with some degree of outstanding debt if they know when it is due to be repaid and especially when there is interest to be added on. A good business will factor this into their planning and operations and will have an effective credit control department to ensure the situation can be contained and the customer pays the full balance on time.
However, when invoices are not paid on time and the outstanding debt remains unpaid it means the business risks running into cash flow problems which could result in insolvency and bankruptcy in a worst-case-scenario.
This is when debt turns ‘bad’. Bad debt is when the money can not be collected and needs to be written off as lost. This is a very troublesome situation businesses find themselves in but there are steps you can take to help your business avoid bad debt.
Business debt recovery
Recovering business debt across all industries requires an identical approach. Your number one goal is to reduce debtor days and get paid as quick as possible before things escalate.
Sending payment reminders
The very first step you should take when payment is due is to send a gentle email reminder on the payment due date.
A handy tip to make your payment reminder email stand out in your client’s inbox is to include your invoice number and “payment due today” in the subject line.
Your customer will be able to see at a glance when looking at their email inbox that you are due to be paid that day to make sure you do not slip their mind.
Business debt recovery letters and emails
Whenever your payment due date passes, and no payment has been made without explanation it is time to act immediately.
Sometimes it can just be a case that your non-payment has been an accident or due to an admin error. Mistakes happen and, in these cases, your first email and letter chasing the payment will be enough to get paid.
Unfortunately, the missed payment may be more cynical, and your customer has deliberately not paid you and has now opted to avoid you. This is when things can get frustrating but it is vital you are persistent.
Following up with letters and emails chasing your payment makes you harder to ignore. When your payment is overdue by weeks, we’d recommend going for a three-pronged approach so that your customer simply can’t ignore you – emails, letters and phone calls.
Pick up the phone
Picking up the phone and calling your customer is the most direct way to chase late payment and try to recover business debt.
This is why we recommend calling to chase payment only after you’ve already tried by email and letter to no avail.
Be assertive but fair
Whilst your priority should be getting paid immediately and reducing debtor days you do not want to go in all guns blazing.
Would coming across rude or more demanding than necessary, risking future business with your customer, be a good idea? Of course not.
Whilst you should be assertive and maintain urgency, even more so when payment is overdue by some time, you should not overstep the line. Being mindful and showing some empathy can go a long way, particularly if you are dealing with a long-standing customer and this is the first time they have been late paying you.
Our guide to sending payment reminders & chasing late payment is full of actionable steps you can take today to chase late payment and get paid quicker.
Getting help from business debt recovery experts
Here at Darcey Quigley we’ve been collecting hundreds of millions of pounds for our clients for nearly 15 years. Trust us when we say we have seen and dealt with it all when it comes to serial debtors and late payers.
Our track record speaks for itself and as UK market leaders in business debt recovery we action cases within 1 hour of instruction. This means as soon as you let us know about your debt we’ll begin pursuing our late payer immediately.
Claiming back more than your outstanding debt
Did you know you are legally entitled to claim back more than just your outstanding debt?
Thanks to the Late Payment of Commercial Debts Act you can claim:
- Reasonable costs
You can find out exactly how much you can claim in just 30 seconds. Answer a few quick questions about your outstanding debt and our online tool will tell you how much you can claim, for free.
Learn more here.
Meet our credit management and commercial debt recovery content writer, Declan!
With a keen eye for detail and a passion for educating others, Declan is committed to creating informative and engaging content that empowers readers to get a firner grasp of their credit control to improve their cashflow.
Connect with me on LinkedIn!