Keeping A Firm Running Whilst In A Recession.
A financial downturn can affect organisations in different ways, for some it can force them out of business, some can continue virtually as normal, such as the finance houses including those that were saves by the taxpayers, whilst most likely the majority can keep running but see that they have lower sales, higher raw materials prices and possibly late payers and/or bad debts.
For this last group, managing the income is important and the capability to take care of Debt collection efficiently may be the difference between survival and failure. There would seem to be three primary options for Debt collection: solicitor, Debt collection business and do it yourself.
When considering how to manage late payers, the organisations that are feeling the effects of the financial downturn need to consider if they want to stay on good relations with the customer for their products or services concerned or can they afford to do no more business from them. The latter choice should be taken not emotionally because it could turn out that the creditor business has their reputation tainted in the process. This question is vital as it can affect the path that is used in Debt collection, because, if the Debt collection business path is used then they must be sure that the business is registered with the Credit Services Association (CSA) as this proves that they are licensed by the Office of Fair Trading (OFT) to practice. This is not often discernable from some web sites, but it can be checked out at the OFT and if there is a difficulty then that Debt collection business is to be avoided. They could have been refused a licence or had it withdrawn for using unethical practices when attempting to recover debts, which could easily have a damaging effect on the creditor’s reputation.
Where a business has late payers but wants to retain their staff then they must use an economical method for Debt collection and this is where the DIY approach comes into the picture, as with this approach they are in charge 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 approach would be to try and get a package of Debt collection software along with a manual on the subject from the same supplier, so that the software should compliment the manual and vice versa. A good Debt collection software system ought to include templates for the Debt collection letters that are carefully crafted for each of the component parts in the Debt collection route, which should be fully documented in the manual. Likewise the Debt collection software should be able to record what events a user has carried out in order to provide a report for use by a solicitor if the debtor has failed to respond to the DIY Debt collection route and they need to be taken to court.
If the creditor does have to use the services of a solicitor then that person will want to be satisfied that the creditor has taken enough attempts to get the debtor to settle, 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 written around this legal route being used at some stage in the Debt collection route and so it should be able to accept entries for all key events and then produce an acceptable output.
It is hoped that most debtors would settle during the DIY Debt collection route and the legal step would only be needed for those who were still in business but stubborn.
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