Is it time to review your approach to debt recovery?
Is it time to review your approach to debt recovery?
DIY debt recovery can be a frustrating time sap that doesn’t always get the results you need. So, is it time to make calling in the professionals, policy?
There can’t be many business owners who are immune to the strain of unpaid invoices. Incredibly, research suggests that approximately 70% of all invoices are not paid on time. More than a mere inconvenience, unpaid invoices can threaten the very existence of the company you’ve worked so hard to build.
With the COVID-19 pandemic compounding cash flow concerns and some commentators predicting a ‘debt tsunami’, now is a good time to review your whole approach when it comes to getting paid and what to do when you’re not.
Here are some of the things well worth thinking about as part of your debt strategy.
Are your client relationships healthy?
Time spent nurturing existing client relationships is time well spent.
According to Julie Parr, at leading law firm for business, Muckle LLP there are many benefits; “Strong client relationships can make you aware of any potential problems coming down the track and allow you to mitigate any risks, as well as keeping your firm top of mind for prompt payments.”
Julie also advises doing your homework when it comes to taking on new clients. “Taking a little time upfront to uncover any prior complaints is worthwhile, helping you spot the potential for any problems later on.”
Have your terms and conditions been reviewed?
Your terms and conditions are at the heart of your relationship with customers, so it’s important to ensure they’re fit for purpose.
Check you’ve included a late payment clause and make sure you’re clear about the circumstances where interest might be added if an invoice is not paid on time.
As Julie points out: “Setting clear and realistic expectations from the start can really help avoid any issues later.”
And if you have a debt recovery policy in place, make sure you follow through with it.
Do you make it easy to pay?
It may sound obvious but it’s often well worth reviewing just how easy you make it for customers to pay.
As Julie and her team at Muckle have found; “If you make paying easy, efficient, and secure for your customers, the evidence shows they’re far more likely to use them. And, if you can offer additional flexibility around payment plans, that is also likely to be well received.”
Do you need professional help for debt recovery?
It can be tempting to just do it yourself, rather than calling on the experts.
But as Julie explains, this can sometimes be a false economy: “We often hear from clients that they think about professional debt recovery as a last resort, but getting professional help has many advantages whether you’re looking to recover one debt or thousands.
“The simple fact is that businesses often find that a letter from a solicitor seeking payment produces better results more quickly than their own attempts at recovery”
So what are the benefits of seeking professional debt recovery support?
Save time
Chasing debts takes time and effort and this can put a strain on your business as you’re distracted elsewhere. Call in the professionals and you can focus on what matters most – running your business.
Save money
Trying to recover your own debts takes time and success isn’t always guaranteed.
More often than not, interest or compensation for late payments under your terms will cover the costs for professional debt recovery services.
If your terms don’t cover this, under the Late Payment of Commercial Debts (Interest) Act, businesses have the right to charge their customers compensation and statutory interest on any overdue invoice to help cover the recovery costs.
Maintain good client relationships
One of the benefits of taking on professional help is that it makes someone else responsible. The debt recovery agent is the one communicating with the debtor and chasing payment. This means that you can focus on preserving the business relationship with your client.
So, when should you get professional help?
When it comes to deciding who is best placed to help with your debt recovery efforts, Julie is keen to stress the benefits of calling on a law firm. “At Muckle we can call on a variety of legal expertise that just isn’t available to credit agencies, helping us get better results for our clients.”
Julie believes the best way to approach incorporating professional debt recovery into your business is to simply make it policy: “State clearly in your terms and conditions that you’ll attempt to recover a debt three times before passing it over to a debt recovery service. You’ll find you spend less time deciding what to do and continually chasing.
“Customers tend to understand that ‘rules are rules’, and this can take some of the heat out of a difficult situation.”
Debt recovery made easy with Muckle Collect
Muckle has been helping businesses get paid for over 30 years, recovering 92% of B2B debts. The team have now developed a new state-of-the-art debt recovery tool, Muckle Collect, that lets you submit and manage your outstanding debts online – anytime and anywhere.
Best of all, with fixed cost and ‘no recovery, no fee options’ available you have the reassurance that comes with a total upfront transparency on fees.
So, when it comes to debt recovery, why not make it policy and let Muckle collect? The results may surprise you.
To find out more about Muckle LLP’s debt recovery services and Muckle Collect, call 0191 211 7889 or e-mail us at collect@muckle-llp.com.