What To Do If After Finishing The First Contract For A Large Enterprise They Are Late In Settling The Account.
If the small business who finished the project is newly formed then they will be keen to get established in the business area they are in. Whether they are newly formed or established, when presented with a large business who are slow in settling their invoices, the small business will have to try and convince them to pay in full, while at the same time not closing the door to further work.
A new business may well have been set up with help from government agencies such as Business Link, who would have given them full information on managing their enterprise including debt collection, so they should either consult the information pack or go and talk with Business Link before they do anything else. An established business may have found themselves in this situation previously and may have a Debt collection strategy in place. Also, there is legislation in place to help small firms in debt collection from larger firms in the form of the “Late Payment of Commercial Debts (Interest) Act 2002”, which permits the small business, i.e. the creditor, to make a one off charge against the large business, i.e. the debtor, for an overdue invoice, as well as this they can also charge interest on the outstanding debt. The creditor has the choice of not making these charges, but it could be a wise move to try and agree with the debtor that this should be part of a updated contract, so that both parties have consented that payments will be made on time and there will be no need for a debt collection process.
Not withstanding advice from Business Link, a new small business would be advised to consider three options for debt collection; see a solicitor who specialises in debt collection, find a debt collection firm in the area, or finally check out Debt collection software and take on the debt collection in-house.
These three options are also worth considering for an established business, which has a debt collection strategy, in case they wish to revaluate their procedures.
Taking on the services of a solicitor or debt collection firm may be costly for a small business, as they are paying for the experience of each party in the hope that they will be successful in recovering the debt, writing Debt collection letters that may work first time. The positive side is that they would not require much time from the small business, who can be left to get on with their jobs while the other party contacts the debtor for settlement.
By doing the work themselves, the small business has to make adequate resource available if they are to be successful and so the employee running the debt collection software should ideally have some expertise in the legal aspects and also have a good standard of spoken and written English. This latter skill is needed when writing debt collection letters as these can be so vital in the debt collection strategy as they make up a major part of the record of contacts between creditor and debtor. The positives are; the small business is in control of the debt collection strategy, they pay a one-off price for the debt collection software package, and it is reusable for future debts at very little cost.
