How Best To Continue with Debt Collection If The Direct Approach Has Been Unsuccesful To Bring Results?
Where a business has completed a project for another business and has had the project signed off by the Project Manager and then submitted their account only to later discover that the final date for payment has elapsed and payment has not been sent, and they have not paid despite several phone calls. If the business carrying out the work is small then they may have taken on sub-contractors to take on key parts of the project, and these dedicated workers will then find themselves in a chain of payment. Each of the parties concerned may have worked together frequently and depend on this carefully formed working relationship to bring in a timely flow of business, so the last thing any of them wants to do is send bailiffs into the business which had the project work done in the first place.
The case of what is essentially the main contractor, which is the business that employed the sub-contractors, is one where they need to lead the Debt Collection process but in a way that has the least harmful effect on the professional relationship they have both ways. The sub-contract business can only really chase the main contractor, but as they hopefully have been informed of the payment problems from the client business, it is in their interests to work alongside the main contractor rather than chase them. The main contractor may well have limited reserves with which to address this issue, not the least of which being cash, so they would need to find the most cost efficient solution that has a good chance of finalising the Debt Collection process to a acceptable closure for all parties. At this time there seem to be three options that can be taken to undertake this: Debt Collection agencies, the legal system, and the Do It Yourself approach. Each of these options has pros and cons that need to all be given consideration before making the choice.
Each option offers different degrees of service at commensurate cost, varying from the DIY method needing local resource to operate the process, then the Debt Collection agency and finally the legal system where the solicitor can handle the operation with minimum time from the client.
The DIY option should include a suitable package of Debt Collection Software and a fully documented manual on how the Debt Collection process works, how to work the Debt Collection Software, specifically how to compose Debt Collection Letters, which are the documents that will be sent out to the client business. These Debt Collection Letters are key to the process so must be checked carefully before beinbg despatched. The Debt Collection Software would also have the functionality to accept user input such as logging operations like Debt Collection Letters being sent out, letters being received and then the functionality to attach a scanned pdf file. The final result would be a system that would log including date & time stamp the operations that took place through the Debt Collection process and could print a hard copy so that it could be passed on to a Debt Collection agency or a solicitor, should this be the next stage. The price of the Debt Collection Software and documentation may well be below £100.
The Debt Collection agency would take the report of what the main contractor had done and then see what they could do, but largely, at this point it is not certain that they could exert any greater pressure than the main contractor had already achieved without the Debt Collection agency themselves deciding that going to a solicitor was the next reasonable step. What the main contractor must be certain of is that only ethical and legal methods are employed otherwise that essential business to business relationship may be damaged irrevocably. The services of a Debt Collection agency is likely to cost substantially more than the DIY method and be over £1000.
The solicitor would also use the records and work with the main contractor and if required, take the next steps to start court proceedings to recover the debt. By the time a case gets to court, the fees that will have accumulated at the conclusion of the case could easily be in the £100,000 plus region.
Based on cost alone and given that the right DIY method will use known working practices, it must be worth it for a small main contractor to try as the next phase in the Debt Collection process.
