How to collect debts
Checklist
- Set up a system to track outstanding invoices; start chasing as soon as an invoice becomes due for payment.
- Draw up a timetable, setting out what letters, phone calls or other action you will take at each stage of chasing a debt.
- Investigate costs and decide whether to involve external help at any stage; ensure that any debt collection agency you use is reputable.
- Keep a file for recording the date of each action, which individual you contacted, and the contents of any telephone conversations.
- Identify the correct contact, and issue a polite reminder letter as a simple first step.
- Follow up with professional but friendly telephone calls.
- Consider alternatives such as fax or email reminders, or visiting the debtor in person.
- Discuss and tackle any problems which are preventing payment.
- Handle any excuses, and ask for a date when you can expect payment; be wary of delaying tactics.
- Use your judgement to decide whether to claim interest under the Late Payment of Commercial Debts (Interest) Act.
- Follow up to make sure the customer is doing what has been promised.
- If the customer claims financial difficulties, attempt to negotiate a schedule of payments.
- Be prepared to stop further credit sales until you have been paid to put pressure on the customer and avoid further risk.
- If you cannot get satisfaction, send a letter of claim warning of your intention to sue for the outstanding debt.
- Investigate whether it is worth taking legal action; assess the customer’s ability to pay, and the likely time and costs involved.
- If you pursue the case, continue to attempt to negotiate an agreed settlement rather than going to court.
- Be prepared to take further legal action to enforce payment.
Cardinal rules
Do:
- chase debts as soon as they become due
- try to resolve the problem if there is a genuine dispute
- use firm but friendly telephone calls
- keep records of everything that is said, and who you are dealing with
Don't:
- accept excuses at face value without establishing what will happen next
- offer further credit to customers who are not paying
- take legal action if the debtor is unlikely to be able to pay
Contact
- Contact the Credit Services Association for registered debt collection agencies on 0191 286 5656
