Business to Business Debt Recovery Protocol

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Business to Business Debt Recovery Protocol

Businesses of every size in any industry are affected by non-paying clients and customers.

The battle between debtors and creditors is known to businesses in England and Wales, Scotland, and the rest of the world. Unfortunately, it is common not to be paid after providing goods or services. This can give company owners a huge headache to deal with, as a business that is owed money can get into financial trouble quickly.

A stable cash flow is vital to maintaining and growing any business. If this is threatened by non-paying clients action needs to be taken as soon as possible. Having a business to business debt recovery protocol can be a great help when trying to recover a debt.

In most cases, instructing a professional debt collection agency is the most beneficial way of resolving any issues. However, there are some steps that can be taken in-house to help the process along.

We asked our collection experts for help with outlining a good business to business debt recovery protocol.

Business to Business Debt Recovery Protocol

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Business to Business Debt Recovery Protocol – How to Deal with Business Debtors

Many businesses take steps to recover a debt in-house. Normally, an accounts receivable or credit control department will be tasked with this. Here are some effective steps that can be taken to aid in the recovery process.

Pre-Action Protocol – Gather All Relevant Documents

Before contacting the debtor or taking any further steps, you should gather all of the documents that relate to the case. This is any record of the debtor agreeing they have borrowed money from you or an agreement for payment of a debt.

For example, you may have a contract, a receipt, a letter of claim, an invoice or even a cheque. Many companies have payment terms on all of their new agreements which has information on the action protocol for a debt. If the debtor has agreed to this, they cannot deny that they have accepted complying with the protocol.

Issuing Payment Reminders

Once you have all of the necessary documents, you should contact the debtor as soon as possible. The best way to do this is either by sending a letter or an email in a way that can be recorded. For post, recorded delivery is the best way, as the debtor will need to sign for it when the letter arrives. This gives you proof that they have received the reminder.

Typically, it is appropriate to send a number of these letters spread out across a reasonable time frame after payment is overdue. A good schedule to keep to is:

  • Send the first reminder between 1 and 14 days after the payment is overdue
  • Send a second reminder between 14 and 30 days after the payment is overdue
  • Send a final reminder letter 30 days after the payment is overdue

Allowing the debtor, a reasonable amount of time to respond between each letter is key, as they may have a valid reason for not paying. For example, they may have just forgotten and don’t know how to pay, or they may have a complaint for which you can work together to resolve the dispute.

Each letter must be professional in tone and should clearly state the situation. The final reminder you send is normally firmer in tone (but still professional) and should indicate that you intend to take further action should the debt remain unpaid. This action might be starting court proceedings or instructing a debt collection agency.

How to Deal with Business Debtors

Instruct a Professional Debt Collection Agency

If your payment reminders are being ignored, it is time to contact the professionals. Despite the best attempts that can be made in-house, it should always be part of a protocol for debt claims to escalate the matter to a professional.

Many companies will issue a court claim or contact a solicitor, but this can be an expensive and time-consuming option.

A professional debt collection agency can provide a service that is effective and low-cost. Most cases are resolved amicably, an outcome that is beneficial to businesses as they can take advantage of future business opportunities.

Best4DebtCollections provide the leading debt collection comparison site in the UK. Our free service is open to businesses and private individuals alike.

Completing our web form takes less than 30 seconds and is the fastest way to begin recovering your owed money.

Business to Business Debt Recovery Protocol

Get the Best4 Debt Collection Quotes Now

The hassle-free way to compare debt collection quotes from the best agencies and collectors in the UK right away

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