Give Me Your Money! - 2nd Edition: A Straightforward guide to debt collection (Straightforward Guides) - Softcover
Book 1 of 17: Straightforward Guides
Synopsis
A straightforward guide to recovering debts. It explains the different techniques of chasing money due from commercial customers and consumers. It's an esential guide for small businesses who need guidance on the legal procedure for pursuing a debt through the county court. It also examines the ways to reduce the number of bad debts.
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About the Author
the legal framework governing the process of
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Introduction
Successful debt collection is all about making an impact. Requests for payment need to stand out from the crowd. It involves more than sending standard letters. This book considers various methods of debt recovery, as well as explaining the legal procedures for pursuing non-payers through the courts.
When it becomes clear that a customer is delaying payment or is refusing to pay, then skill is required to recover the debt. It involves using all the information you have about the debtor and placing yourself in a position of control. This book covers the legal aspects of debt recovery, including the importance of carefully drafted terms and conditions of business. However, legal jargon is kept to a minimum to avoid it reading like a textbook instead of a practical guide.
As in most areas of life, prevention is better than cure. To reduce the risk of being owed money, it is sensible to take precautions before entering into contracts. A little time spent investigating who you intend doing business with can detect warning signs which indicate whether the customer is likely to be a bad payer. It is very important to investigate the financial background of a company or individual. It is possible to build up a reasonable picture of a potential customer by a few basic checks that do not cost much. This book explains what steps should be taken to satisfy yourself that the person or company you are dealing with is financially sound and likely to pay your bills. Credit information can sometimes be ambiguous and so guidance is given as to what it could mean. The guidance given is not intended as a comprehensive analysis. It highlights only some of the important factors to be considered when making a credit decision.
Every business should have a system for chasing late payments. If your procedure for filtering out potentially bad payers is effective, then it will not usually go beyond reminders. When it becomes clear that the customer is delaying payment or is not going to pay, then a certain degree of skill will be required to recover the debt. It involves absorbing all the information you have about the debtor and placing yourself in a position of control. Once you reach this position, then the money should come in with the minimum of effort. "Control" does not mean anything that involves threats of physical violence. It is an intellectual exercise aimed at curtailing the game of excuses for non payment. To try and cut through the excuses, you might have to engage in assertive conversations or write letters that get straight to the point.
This book considers the different approaches to recovering debts depending on whether you are chasing an individual or a company. When chasing a commercial client you will have to consider whether you want to retain a good business relationship with that organisation. It is therefore vital that there is a close relationship between the sales force and the credit control department. The sales force should be educated to understand that a "sale" is not complete until the money is in the bank. Conversely, credit controllers should also see the need to be more lenient in certain situations for the greater good of the company.
Once you have tried all the various telephone and written techniques to recover the money, then court action is an option unless you decide that the debt is not worth pursuing. Recovering a debt through the county court process can be frustrating, but to improve your chances of succeeding it is important to have a good understanding of the legal procedures. There are strong economic arguments for companies handling small claims in-house. However, with the small claims limit currently at £5,000, a debt just under this level can represent a considerable sum to a small business. Therefore, it might be worth instructing solicitors to avoid mistakes even though only limited fixed costs can be recovered in the small claims procedure.
The techniques for debt recovery set out in this book are based on many years experience. It is not suggested that these techniques will work in every situation. They are merely methods which the author has found to be successful. There will of course be cases where whatever you do the debt will not be paid. However, by giving due consideration to being paid by customers and implementing proper procedures, the chances of being saddled with bad debts should diminish and cash flow should improve.
The law and court procedures described in this book cover claims that come within the jurisdiction of England and Wales. There are separate legal systems in Scotland and Northern Ireland. Therefore, this book does not cover claims that come within the jurisdiction of Scotland or Northern Ireland. However, as is explained later, it is possible to issue a claim for money in a county court in England and Wales where the defendant resides in Scotland or Northern Ireland. Once a judgment is obtained, the judgment has to be transferred to the appropriate court in Scotland or Northern Ireland so that it can be enforced in that jurisdiction.
Whilst every effort has been made to ensure that this book provides accurate and expert guidance, it is impossible to predict every situation that may arise. Therefore, the author, publisher and retailer cannot be held liable for any loss or damage caused by the information or any mistake contained in this book.
Anthony Reeves
December 2003
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