Saints & Sinners in the world of Debt Recovery

April 26, 2017
Debbie

We have frequently highlighted the problem of SMEs receiving increasingly late payments from their customers. With 70% of firms relying on getting paid within the payment period to maintain their cash flow, they can experience severe difficulties when as many as 60% of invoices remain unpaid in the payment period.

This climate of late payment has led to an increase in the number of companies offering debt recovery and collection services. Not all of these companies follow ethical codes of behaviour and a number of them are taking advantage of the desperation of small business owners. The Radio 4 consumer affairs programme ‘You and Yours’ looked at a specific case today, where a company had demanded an upfront payment and then appeared not to pursue the debt

So how then can you be sure that the company you choose to pursue your customers for late payments will act in your best interests? Follow our simple rules to ensure you are not taken for a ride:

  1. Be wary of firms who claim they can get money back from the Directors of liquidated companies; there may be a case but are you confident the company can pursue it and do the Directors have the ability to pay?
  2. Never pay upfront for standard debt collection services: we would always suggest that your fee is paid pro rata as money is collected.
  3. We would always recommend you chose a debt collection agency which is a full member of the Credit Services Association (CSA) and, furthermore, adheres to their code of practice
  4. Do some simple research into your chosen company before paying over any money to them. Interestingly in this case the company in question has two CCJs registered against them.
  5. Louise Stewart from the Federation of Small Businesses also mentioned that two out of three businesses have issues with late payments – get expert advice to help you, ideally on a ‘no win, no fee’ basis.

Finally remember, that old adage, as Louise Stewart of the FSB said, ‘if something sounds too good to be true, it probably is!’

If you would like free, impartial advice on how to pursue late payers the ethical way, please give the team at the Debt Recovery Bureau  a ring on 0800 440 2359.

If you’d like to listen to the programme yourself you can find the item here http://www.bbc.co.uk/programmes/b08n1xz8#play from 34:42

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