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Debt Recovery : How to go about it
It’s critical for you to be paid what you’re due by your clients and customers. Late payers and those who try to evade paying for products and services, may be financially detrimental to your company and persistent late payment can have long-term and detrimental consequences to your cash flow and to your profitability. So, what steps should you follow if a client fails to pay?
Debt Recovery – Invoice as normal
You should start the debt collection procedure by billing your customers as usual. You and your customers should have previously agreed on payment arrangements, so you should preferably wait for their confirmation of payment at this stage.
Chase your Debts
A payment period of 30 days is often included at the foot of invoices. If you discover that a customer has not paid you when you expected, you should begin the process of following up on the invoice immediately. Send more emails or schedule further phone calls to the customer, respectfully reminding them that they must pay for the goods or services you’ve supplied for them, or the situation may worsen.
Instigate a Credit Hold
Another standard step to take in the debt recovery process is to put a halt on any ongoing work you are carrying out for a customer until they settle their existing debt. This is also sometimes known as a credit hold and is common in cases when work for a particular client has to be halted on account of a lack of funds.
You may find that this resolves the situation since a company may suffer if you don’t provide them with the goods or services that they need. However, if you do not get your money as a consequence of this, you still have some alternatives.
Issue a Final notice
The last item of communication you’re likely to send before you turn to legal proceedings is the Final Notice. This reminds them that they will face legal action if they don’t settle their debts with you.
If your customer does not settle any payments due to your company after receiving this last notice, you have reached the end of the line in terms of what you can do, and the next step will be to turn to the courts directly or to debt recovery experts.
No one wants to go through the hassle of court action, and it can sometimes be avoided by involving a professional debt recovery agency. When a debt reaches this stage, you have two main options:
Go through the Small Claims Court
Both you and your client will be able to arbitrate and reach an agreement in small claims court. This generally entails the client being ordered to refund any debt, interest, or costs incurred as a consequence of your having to take legal action. But still, you client may not pay…
Turn to a Professional Debt Collection Agency
The second legal alternative is to engage the aid of debt collection experts. A modern debt recovery company will be able to handle all aspects of the legal actio, including managing the legal process, obtaining judgments and initiating any required enforcement action. A debt recovery agent will also be able to give you the advice, resources and guidance required if you plan to pursue the legal route.
If your business is struggling with a domestic or international debt collection issue that you cannot resolve and you fear that legal action may be your only recourse, get in touch with us today and find out how our team of debt collection experts can help you resolve your debt issue quickly and with the minimum of hassle.
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