Every business across every industry sector is working amid the most challenging of times, and for all businesses that are continuing to operate, today’s business is anything but usual.
However, collections and collecting on outstanding debts must continue for businesses to grow and survive.
The good news is Direct Route is on hand to provide expert professional advice and support in all areas of your debt collection process.
With a staggering £6.2 million overdue invoices and debts collected by the end of 2020 and set to rise, collections have never been more effective or efficient for commercial businesses.
However, debt collection is not a haphazard process. Instead, the debt recovery process is a structured, well-planned series of steps to achieve the most successful outcome.
Today, having a robust collections process is vital to ensure you have everything in place to keep your cash flow healthy and your books balance.
Steps in debt collection
The general steps to help you collect on invoices owed include:
Invoice when work is complete. You must invoice your customer as soon as the work has been completed. Delaying invoicing not only delays payment, but it can also be quickly and easily forgotten, with some customers believing that they’ve now got the product/service for free!
Follow up. If you’ve submitted your invoice, it is now past the payment due date, and you’ve still not received payment, chase up your invoice with the customer. Send reminder emails or make a courtesy phone call to ensure everything has been received and everything is ok.
Stop credit. A way to prompt a customer into paying faster could be to put their account on hold and stop doing work for them until all invoices have been settled in full.
If this still doesn’t work:
Provide them with a final notice. Final correspondence is the last piece of communication you will have with your customer before you hand it over to a professional debt collection agency or you make the decision to take legal action against them.
Small claims court. If successful, the courts will order your customer to repay any debt, interest, and fees associated with you having to take legal action.
A professional debt collection team. A third-party team who works on your behalf to put into practice tried and tested debt collection techniques to gain a successful outcome.
A debt recovery process to get on board with
Direct Route recently worked with a BPMA (British Promotional Merchandise Association) distributor member to support their recovery process and collect overdue debts during the Coronavirus pandemic.
After speaking to the BPMA member, it became clear that maintaining relationships with customers was important. Our client didn’t want to drive their customers away; they simply wanted to find a better credit control practice, where late payments and invoices not being paid became a thing of the past.
In response, at Direct Route, we provided our newly formed COVID 19 support service.
Taking an empathetic approach to the debt recovery procedure, our teams took on the following process:
An initial letter was sent to engage the customer in initial communications. Offering full payment options, a date for settlement, or an instalment offer by an agreed set date.
Unfortunately, this due date came and went with no engagement or communication from the debtor, posing a warning signal for our team.
At this stage, it was decision time. Should this high-profile customer be escalated to full debt collection procedures?
After a difficult thought process, our client felt they had no choice if they wanted to survive and so escalated the situation to full debt collection.
From here, the process continued:
We put a formal seven-day debt collection demand into motion.
Fortunately, three days after escalating to full debt collection procedures, our client received their money, boosting their cash flow and balance sheet.
What made this particular case study popular news?
The debtor in question filed for administration and formally declared its insolvency the very next working day after our customer received full payment.
To say this particular BPMA distributor was pleased to have instructed a professional debt collector with robust collection procedures when they did is an understatement.
A robust procedure is ALWAYS required
The sooner outstanding invoices are passed to a professional collection agency, the better, as this offers the highest chance of successful collection.
As proven, putting off or delaying collection procedures can cost businesses dearly.
At Direct Route our zero-commission service has been helping businesses recover commercial B2B debts for over 25 years.
If you pay to recover business debts, get in touch, and we’ll show you a quicker, less expensive way.
Direct Route – zero commission commercial debt recovery.
To find out more about Direct Routes COVID-19 support service follow directroute.co.uk/covid19support.