What Action To Take If After Completing The First Project For A Large Firm They Are Late In Paying The Bill.
If the small company who finished the contract 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 company who are reluctant in paying their bills, the small company will need to try and get them to pay in full, while at the same time not closing the door to further work.
A new company might well have been set up with help from government agencies such as Business Link, who would have given them a lot of help on running their business 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 company 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 authorises the small company, i.e. the creditor, to make a one off charge against the large company, 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 option of not making these charges, but it should 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 company might wish to consider three options for debt collection; visit a solicitor who specialises in debt collection, find a debt collection business in the area, or finally investigate Debt collection software and undertake the debt collection themselves.
These three options are also worth thinking about for an established company, which has a debt collection strategy, in case they wish to revaluate their procedures.
Taking on the services of a solicitor or debt collection business may be costly for a small company, as they are paying for the expertise 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 company, who can be left to get on with their work while the other party chases the debtor for payment.
By doing the work in-house, the small company has to make adequate resource available if they wish to succeed and so the worker running the debt collection software should really have some expertise in the legal aspects and also have a good standard of spoken and written English. This latter skill is required when writing debt collection letters as these can be so crucial in the debt collection strategy as they make up a major part of the record of transactions between creditor and debtor. The positives are; the small company 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.
