Despite recent changes to payment legislation, late payments are still commonplace in UK business culture, with SMEs in particular bearing the brunt of the issue.
According to Bacs, SMEs are owed an estimated £26 billion in outstanding payments, and as a result, many firms are struggling to pay suppliers, staff and rent on time.
So what can small business owners do to tackle the problem?
1. Leave it to the experts
It’s likely that you spend a lot of time chasing payment from clients with little to no success. However time is money, and the more time you spend looking to recover outstanding payments the more costly it becomes to pursue a debt.
An alternative and cost-effective solution is to outsource to a Debt Recovery Specialist. Experts in debt collection will have the time and resource needed to effectively pursue the money you’re owed, so you don’t have to.
2. Act quickly
Once an invoice becomes overdue its important you act quickly because the older a debt becomes the more difficult it is to recover monies owed, and the less likely it is that your customer will pay.
The increased difficulty in collecting debt can occur for a number of reasons; your customer may no longer be traceable via the contact details you have for them, they may have sold or dissipated their assets, or they might raise a dispute – which is difficult to contest if you have insufficient evidence to support your claim.
What’s more, there is a time limit on collecting the money you’re owed. Generally, for contractual debt, there is a statutory limitation period of 6 years which runs from the date the payment is due.
3. Seek legal support
When it comes to outsourcing debt collection there are several options available and so it can be difficult to know where to turn. Typically, you could choose to appoint a traditional debt collection agency to act on your behalf, or you could use a specialist firm of solicitors. The key difference between the two is that most DCAs deal with pre-legal collections only, and so if you decide to issue legal proceedings they would have to pass your case onto a third party solicitor.
With J&P Credit Solutions you don’t have to choose between a DCA and a law firm. Our comprehensive business model and internal expertise allow us to provide you with the best of both worlds. We have the capability and capacity of a traditional DCA to competitively deal with pre-legal cases, as well as the knowledge and expertise of specialist debt recovery solicitors.