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The Best Way To Proceed with Debt Collection If The Direct Approach Has Proved Unsuccessful To Bring Results?
Where a company has completed a project for another company and has had the work signed off by the Project Manager and then submitted their bill only to later learn that the closing date for payment has passed and payment has not been received, and they have not paid despite several phone calls. If the company carrying out the work is small then they may have contracted sub-contractors to take on key elements of the project, and these contractors will then find themselves in a chain of payment. Each of the parties involved may have worked together many times and depend on this carefully formed working relationship to bring in a regular flow of business, so the last thing any of them wants to do is send bailiffs into the company which had the project work done in the first place.
The case of what is essentially the main contractor, which is the company that employed the sub-contractors, is one where they need to lead the Debt Collection process but in a way that has the least harmful effect on the business relationship they have both ways. The sub-contract company can only really pursue the main contractor, but as they would have been kept up to date with the payment problems from the client company, it is in their interests to work with the main contractor rather than pursue them. The main contractor may well have limited means with which to address this issue, not the least of which being financial, so they would have to search for the most economic answer that has a good chance of completing the Debt Collection process to a agreeable conclusion for all. At this time there seem to be three options that can be taken to handle this: Debt Collection organisations, the legal system, and the Do It Yourself approach. Each of these options has pros and cons that need to all be thought through before making the choice.
Each option offers different degrees of service at commensurate cost, varying from the DIY option needing local resource to run the steps, then the Debt Collection business and finally the legal system where the solicitor can handle the operation with minimum time from the client.
The DIY option needs to comprise a suitable package of Debt Collection Software and a fully documented manual on how the Debt Collection process works, how to operate the Debt Collection Software, specifically how to create Debt Collection Letters, which are the items that will be sent out to the client company. These Debt Collection Letters are key to the process so must be checked carefully before beinbg despatched. The Debt Collection Software would also have the functionality to gather user input such as registering events such as Debt Collection Letters being sent out, letters being received and then the functionality to attach a scanned pdf file. The end result would be a system that would register including date & time stamp the events that occurred through the Debt Collection operation and could print this out so that it could be given to a Debt Collection business or a solicitor, should this be the next step. The cost of the Debt Collection Software and documentation could be less than £100.
The Debt Collection business would take the record of what the main contractor had done and then see what they could achieve, but largely, at this point it is improbable that they could bring about any larger pressure than the main contractor had already carried out without the Debt Collection business themselves deciding that passing the work to a solicitor was the next obvious step. What the main contractor must be sure of is that only ethical and legal methods are used otherwise that valuable business to business relationship may be violated irrevocably. The services of a Debt Collection business is likely to cost substantially more than the DIY method and be over £1000.
The solicitor would also work with the records and work with the main contractor and if required, take the logical steps to start court proceedings to recover the debt. By the time a case gets to court, the fees that will have added up at the conclusion of the case could easily be in the £100,000 plus region.
Based on cost alone and given that the right DIY method will incorporate known working practices, it must be worth it for a small main contractor to try as the next step in the Debt Collection process.
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