If the small company has been performing projects or providing products to the larger company for some time, perhaps years, the chances of a late payment now and again might be fairly good, after all we all make mistakes don’t we? However in the current economic situation, the small company might need payments on time from all purchasers and hope that some of them will clear the bill before time. If the bill to the larger company is of a high value, even in just small company terms, say a few thousand pounds possibly, then this might have a significant effect on their cash flow, after all they will have their own bills to pay on time and the overdue bill could make the difference between solvency and administration. If the professional relationship has been built up over years then the last thing the small company will want is to throw all that away by going straight for Debt Collection methods, such as a lawyer or Debt Collection businesses, where strong Debt collection letters might get sent out.

The small company should contact the larger company to try and find out what has changed. The pro here is that it might turn out to be a oversight which could be resolved quickly and it also helps to keep the professional relationship. The possible con is that if the larger company is having financial problems then they might play for time instead of being open and try and make the small company wait longer that they should.

If the small company finds that they are not going to get the bill paid then they might well look into Debt Collection methods. There are two what might be described as conventional methods; a lawyer, or Debt Collection businesses, which specialise in commercial Debt Collection. The pros here are that they should bring skill in creating good Debt collection letters and also have the personnel and the time to devote to the Debt Collection activity. They might well have a sample demand letter as an example of their past work. The cons are largely the cost of that skill, personnel and time, where fees of around 10% and more are normal, and if a court appearance is recommended then the fees can rise even higher. One more con is that these fees are made for any future debts they handle. There is a third path, that of Debt collection software which will allow the small company to internally. The pros here are cost since Debt collection software packages can start below £100 and once bought it can be set up for any future Debt Collection. The cons are that the small company will have to make resources available in-house, such as personnel to operate the Debt collection software and compose the Debt collection letters, a printer to print off the Debt collection letters, although this might be an existing office printer, and finally a new PC might be required. Provided the small company chooses wisely and buys a Debt collection software package that provides a good a manual, which explains the Debt Collection activity in detail and also how to compose convincing Debt collection letters, relevant to each stage of the Debt Collection activity. The provision of templates for these Debt collection letters would help the personnel to compose effective Debt collection letters of their own that should prompt the larger company to pay the bill, especially if they find more Debt collection letters arriving, sent as part of a structured Debt Collection plan.