Time to Hire a Debt Collection Agency
When is it Time to Hire a Debt Collection Agency
These are difficult times for most UK SMEs as the economy continues to struggle under the weight of the Covid-19 lockdowns. One of the biggest problems is late payments. The situation is so severe that some SMEs are facing the prospect of going bust.
So what should you do if your business is being hit by late payments? At what point should you take serious action to address the issue? It is understandable that during the worst of the pandemic many businesses didn’t push too hard for payment, but the effects of that prolonged period of laxity are now starting to emerge.
Late payment causes two problems. Firstly, it hits your cash flow, which is the lifeblood of any business. Secondly, it forces you to devote time and resources to seek recovery of the debt, particularly if it requires legal action. The combined effect is to impose a major burden on your business. In fact, a recent survey by the Business Banking platform Tide discovered that small businesses spent an average of 90 minutes every day chasing up unpaid invoices. That equates to around 30 hours every month.
In the debt collection sector, they have a saying: ‘the older, the colder’. This means that the longer an invoice remains unpaid, the less likely it will ever be paid. It’s a saying that is backed up by hard facts, as statistical studies show this phenomenon clearly.
It has often been the case that businesses will wait until their debt volume reaches a critical mass before calling in a debt collection agency, but there is evidence that this is changing. It seems that these days, businesses are far more willing to turn to a debt recovery agent.
Act Now to Aid Business Recovery
As UK businesses slowly return to normality with the easing of the lockdown, now is a good time to treat unpaid invoices as a priority. Dealing effectively with outstanding debt will provide a much-needed boost to cash flow at a crucial time.
You may be concerned that pursuing debt at this time could lead to a loss of customers. In fact, the evidence indicates that this is not the case. Providing that your debt recovery approach is professional and flexible, and treats each outstanding debt as a unique issue, applying pragmatic but effective methods in each case, business relationships can be maintained and even strengthened as a result of the debt collection process.
So how do you choose the right debt collection agency?
Not all agencies are equal and it is essential to do due diligence before you hire one. The good news is that the UK is home to many of the world’s leading debt recovery companies.
Our expert debt collection agents are fully trained and adept at securing debt repayment effectively while maintaining a professional and responsive approach, helping to ensure that your business relationships are secure, and enabling you to focus on helping your business to recover.
For more information on UK Debt Collection or International Debt Collection, please contact us. Our website platform also offer International Letter Before Action Services. Credit Limits international is a member of the TCM Group.