Why Your Business Needs A Debt Collection Process
Late payments are a huge problem for UK businesses with 5.9 million SMEs chasing more than £50 billion worth of invoices.
Unfortunately, most debts owed to SMEs are from larger businesses not paying invoices on time.
Given recent world events and the impact the pandemic has had on industry and the economy it looks like things may only get worse with insolvencies expected to spike.
As a business operating today you should have a debt collection process in place so you can act swiftly in the event of a late payment.
What should a debt collection process look like
As soon as you send an invoice you need to know exactly when it will be due in accordance to the credit terms so that you can send prompt reminders and chase late payments as soon as your payment date passes.
As you approach your invoice due date, we recommend sending a gentle reminder. Although your invoice is a huge priority for you sometimes it might not be for your customer, and as a result it can be forgotten about. Sending an invoice reminder before or on your due date will help bring your invoice back to the attention of your customer.
From time to time, you may experience late payments. With a solid debt recovery process, you should not need to panic when invoices become overdue as you will have a plan to recover what you are owed.
The key is to always be proactive chasing overdue invoices.
You may need to send multiple chasers for payment. You should have a template for each of these and know exactly when you are going to send each one. Here is an example of a simple process to follow when chasing late payments:
Invoice overdue by 1-2 days – Send 1st payment chaser.
Invoice overdue by 7 days – Send 2nd payment chaser.
Invoice overdue by 14 – 30 days – Send 3rd payment chaser.
Invoice overdue by more than 30 days – Send a 4th and final payment chaser as a final demand for payment.
We’ve put together a complete guide on sending payment reminders and chasing late payment. You’ll find tips on writing these reminders and chasers as well as what compensation, interest and reasonable costs you can legally claim for overdue invoices!
Getting help collecting commercial debt
If you have a particularly problematic customer it can feel like you are pushing against a solid brick wall, getting nowhere trying to collect outstanding debt.
When you experience situations like this it is time to get some backup, or else risk writing off what you are owed as bad debt, something no business wants to do.
Darcey Quigley have been collecting commercial debt for almost 15 years, and in this time we’ve recovered debts worth hundreds of millions of pounds for clients all over the world. No debt is too large or too small for us and we have seen it all when it comes to debtor behaviour and excuses.
How Darcey Quigley’s debt collection process is different
Communication is pivotal in an effective debt collection process and something we excel in.
When using Darcey Quigley as your commercial debt recovery partner you’ll be kept informed every step of the way from when we action your debt collection to successfully recovering what you are owed.
Your case will be managed by your own dedicated credit management consultant who you can think of as an extension of your own organisation. They will work with you to establish your case and discuss the best action to take.
Claim what you are legally owed
Did you know you can legally claim interest, compensation and reasonable costs for debt recovery?
Late payment legislation set up by the UK Government to combat the late payment problem businesses face.
If you have late invoices, you can find out exactly how much you can claim in just 30 seconds with our free calculator!
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!