You know the scene, you billed your customer 6 months ago, giving them 30 days to pay. After all this time, you have still not received your cash and it feels like you have run out of options.
Well, truth is, you haven’t and you may still be in a position to rescue the customer for future business. Below is a very quick summary of some of your options;
Option 1: Credit Control
Have you really finished your credit control process completely? Have you asked the direct questions that matter? “why have you not paid the invoice?” or have you used a provocative statement that gets you noticed? “You have not been able to pay the debt owing to us for the past x months, I assume you are having serious cash issues?”. It is one that should not be used all the time as you are potentially giving your customer a “get out”, but if the situation looks bleak it can sometimes prompt a business owner to give you a reaction that will give you a better insight into the issue and may then lead you to be able to start discussing a payment plan that keeps everyone in business.
Option 2: Court Action
You may be fed up with the whole situation and just want to an end to it. If you feel court action is your best chance of recovering your funds then you can place your claim directly online via Money Claim Online (https://www.moneyclaim.gov.uk/csmco2/index.jsp) as long as your debt is under £100K and is in England or Wales. It will cost you around £60-£70 to make your claim. I would recommend that before you spend the money on making a claim that you pull a credit report to ensure that there is a chance for a positive outcome, there is no point in taking legal action against a company that is not trading or is in entering into administration. However, sometimes making a claim is a matter of principal and as long as you are aware of the extra costs then go for it. Once you have made your claim, you should ideally print out your claim and send a copy to your customer, this may have the impact of forcing them into an action. This is the time you should research your options you will have once your claim has been heard. You need to remember that even if you win your claim, there is no guarantee that you will see any of your money and you may incur further fees (which would be added to the original debt) to get into a position to make a recovery.
Option 3: Debt Collection Agency
The dreaded DCA, in reality they have very little power to enforce a debt! But what they do have is an annoyance factor that is hard to reproduce yourself. Very rarely will you have time to make contact with your customer on a regular basis to keep the pressure on them about payment. They will also have a different experience in collecting debt and the psychology of being contacted by a debt collector is often all it takes for a customer to loosen their purse strings and make a payment. Most debt collection agencies will offer a variety of payment fees, the most common is No Win No Fee, so you have nothing to lose. The commission will range from 7%-20% on the actual cash collected. Some will also offer a set fee depending on the size and age of debt, so don’t be scared to ask for the best possible deal, regardless of what is advertised on their website.
