Old Debt Collection (Part 2)
Chasing Old Debt – The Complete Debt Collection Guide (Part 2)
As detailed in our previous article on Old Debt Collection, If the debt is within the six-year period or one of the exemptions applies, then you can consider how to chase that debt and you have two main options:
1/ Pursue the debt yourself
2/ Engage the services of a debt collection agency
The first option may seem easier or cheaper, but in fact, most modern debt recovery agencies will not charge a fee unless the debt is recovered. Whichever option you take, the next step is to begin the debt chasing process.
Chasing Debt: Taking Action
The best way to avoid chasing up old debts, of course, is to prevent them from happening. By drawing up clear payment terms with any customer, which specify dates, penalties and arrangements in the event of debt not being paid, you will put yourself in a stronger position to recover debts in the future. Even if an agreement to pay is a verbal rather than a written agreement, it can be witnessed, which will provide a basic paper trail.
Gather the Documents
The first step in chasing an old debt is to put together all of the relevant documents. This will include any documents relating to the initial transaction or credit agreement, along with copies of any conversations or follow up letters associated with the debt. Each debt may have to be treated in a different way, so it is important to have all of the relevant documents on hand. Having the facts at your fingertips will also enable you to deal with debt negotiations more efficiently.
Speak to the Right Person
When chasing a debt, it is vital to ensure that you communicate directly with the person who owes the money or who is responsible for paying the debt, if the debt is with another business. Speaking to someone who doesn’t have the authority to pay the debt can be a waste of time. If you are finding it hard to reach the right person, this can be a sign that they do not intend to resolve the debt.
Always be Polite and Professional
One of the key things to remember when chasing old debts is always to speak with the debtor in a polite and professional fashion. This can be a challenge, as there is often a certain degree of emotion associated with debt, particularly if it is a large debt that is having an impact on your business.
This is one of the reasons why email or written communication is the best place to begin, as it is far easier to maintain a professional tone and approach than with a face to face meeting, which can easily degenerate into an argument, making the process harder.
By keeping communications professional and polite, you will retain the high ground, and you may even find that such an approach can produce quick results, for instance, in cases where there is a good explanation for the non-payment, or where the debtor has simply overlooked paying.
Follow Up Communications
If your initial efforts to contact the debtor have failed and there is no evidence that the debt is going to be repaid, the next step is to make a second contact attempt. This should simply remind the debtor of the debt and that it is due. Even if your initial attempt was made through a telephone call, it is a good idea for follow up communications to be in writing. Ideally, this should be a recorded delivery letter or an email with a read receipt, which will prove that the communication has been received.
Debt Chasing Escalation with a Debt Recovery Agency
If follow up contact does not produce progress, you may consider turning to a professional debt recovery agency. Modern debt recovery services take a responsible and reputable approach to debt collection, pursuing a range of methods, all of which are designed to ensure both the recovery of the amount that is owed and that existing business relationships are not damaged in the process.
Giving a debt recovery agency the responsibility of chasing your debt not only significantly increases your prospects of recovering your money, but also frees you up to focus on growing your business.
If you’re struggling with old debt, get in touch with us today and find out more about how we can help you to recover the money you are owed quickly and efficiently.