In the present recession, cash flow for firms may be difficult, in that if they are owed money for work or sales they will have to consider their options on Debt collection. Do they take it on by talking to the debtor company or do they engage the services of a solicitor to chase the debtor for payment. A Debt collection agency might offer seemingly attractive deals e.g. no win no fee, but such agencies may take it that only a small payment from the creditor is a win and so charge their fee, which may be calculated on the whole debt. Not all Debt collection agencies would work in this way, but would their web sites show this degree of detail and so allow the creditor the knowledge to take an informed decision? The other choice is to do the Debt collection themselves by using a Debt collection package, consisting of Debt collection software and Debt collection letters. Such packages can be obtained from under £50 and organisations who sell these packages should be able to give full details of what is included and maybe also some idea of the time required to use the application for a normal Debt collection process. The costs for a solicitor or a Debt collection agency are likely to be on a sliding scale and would generally be based on the debt value, although a solicitor may require a set fee for the first letter, any further Debt collection letters may be more expensive perhaps.

When operating Debt collection software packages both the creditor and the Debt collection software should be aware of the Late Payment of Commercial Debts (Interest) Act 2002, which was first set up in November 1998 and amended in August 2002. This legislation allows a creditor to make both a one-off payment and also interest charges as soon as an account goes overdue. If the creditor has not cited this act in the original contract with the debtor, there is nothing preventing them from implementing the aforesaid charges. However it may highlight some complaint from the debtor to be suddenly shown a higher bill and this may bring in problems should the creditor later apply for a new contract with the debtor company. To try and save this from occurring it would be best for a creditor that didn’t refer to the law to contact the debtor either by telephone or by personal appointment and courteously inform them that the bill is late and they would not wish to have to make the charges that they are permitted to do by the law.
If this fails to stir the debtor into action, then the creditor will have to use the Debt collection software in earnest and generate Debt collection letters, which should already be present in the Debt collection software as templates, ready to use once the debtor details are entered into the database. The creditor should be able to alter the Debt collection letters text to reflect their situation or relationship with the debtor, but they must resist using emotional language as this will show them in an unprofessional light with the debtor. By using this method it is hoped that the debtor will be persuaded to pay the bill and also settle up on time in the future.