Businesses crack down on big debts and wayward debtors

According to many in the Debt recovery industry, patience is wearing thin with late payers and that despite companies still wanting to preserve good relations with their client’s, they are nonetheless not hesitating to issue late payers with the threat of legal action much sooner.

For those in business, taking a customer down the debt recovery and debt collection route pretty much signalled then end of that relationship, but now, more than anytime in the past couple of years, positive cash flows are a major concern, and with more personal and commercial insolvencies predicted for 2011 it seems the gloves are off.

According to figures, in the Q4 of 2010, late payers were being issued with a Letter Before Action (LBA) 10 days sooner than the same period in 2009. And once that LBA is sent, debtors are subsequently getting 7.5 days less to make the payment before a legal claim is actioned or the case progressed.

You could argue that if a customer has received their goods and has gone way beyond the invoice due date, or perhaps if you regular customers but whom are also frequent late payers, that they don’t value the business relationship in the same light as you? However, to disregard any element of customer service and send in the goodfellas the day after due date is not going to help matters. Honesty, professionalism and customer service can all still be achieved even when taking debt recovery action if you have the right approach.

What is more the case for the increases rather than customer service going out the window is that commercial debt recovery and debt collection amongst businesses who haven’t fallen out of favour is simply more accepted given the extreme economic climate. You can demand money from a debtor with menaces or you can still be professional about it and explain you have no choice in the matter as you have your own cash flow position to worry about and can’t allow your debtors to juggle theirs at the detriment to your own!

Whilst it is encouraging to see that businesses are not letting late payments lie, for many it is still a dilemma when it comes to chasing debts as there is understandably a reticence to alienate customers.

Another trend in the commercial debt sector is the rise in the value of the debts being chased which is largely due to a more pragmatic and efficient focusing of resources on securing the bigger debts, which in turn have the biggest impact on cash flow. Another reason for the increases is that whilst many businesses have been downsizing back office functions and staff numbers, on the flip side they have been handing over the debt recovery function via outsourced credit control services to firms who offer outsourced credit management.

For more details on Debt Recovery, Outsourced Credit Control or if you need help locating gone away debtors with our Debtor Tracing services, Corporate Credit Debt Recovery are backed up with the commercial experience to reduce your debtor days and as such we have an impressive client portfolio to show for this, ranging from small start up businesses to international blue chips.

Whilst we can help your recovery outstanding debts it is worth remembering that we can also help with preventive measures to reduce the likelihood and impact of future debtors.

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