Corona Virus is clearly one of the biggest threats to organizations any of us will ever likely face in our lifetimes. None of us can say we were expecting it, or prepared for it. The coming weeks and months will be a bumpy ride, so we have put together some top tips right now for giving you and your business a greater possibility of surviving such an unexpected crisis.
Prioritise cash. Try not to stress over profits, turnover, or new sales, just cash matters now. Search for every opportunity to hold money inside the business; examine your outgoings carefully and cut any unnecessary expenses. Tighten your credit control processes, and collect all invoices beyond 30 days. See our previous article for expert tips on credit control, or for more detail check out The Chapter Technique. You need to be cash forecasting for 3-6 months, and look at this on a daily basis.
Look closely at all your outgoings – what do you need for the business to function, and what don’t you need? Reduce or cut totally what you don’t need, including your own pay-packet. When cutting, be brutal, and do it early, so that in the long run in hindsight, you won’t kicking yourself or regretting anything. Focus on the assets in your business that are the most valuable.
Don’t let this virus infect your business! Together we can beat it.
Timeline planning – Treat the COVID-19 crisis as one that will last 3-6 months. Produce short and medium term nett & gross income estimates and discuss openly with your staff and colleagues and get their assurances that they will do their very best to help your business survive!
Remember you are not the only one. Everybody is in just about the same situation. Do whatever it takes not to feel overwhelmed. Try not to freeze. Relax. Make short strides, little steps, not enormous jumps. Converse with and watch what others do in and outside of your industry. Take backing and thoughts for managing this emergency from anyplace and wherever you can, nobody has the complete answer. Ask people openly for advice, particularly customers, colleagues, friends and relatives. What are other people doing?
Ask yourself, what will it take to close this business down, and which of my rivals will be able to keep trading and why? Ask yourself what you can change rapidly, and how to be that survivor. Be intense. Search out better approaches for working. Try not to keep hold of the ‘old’ methods for getting things done. Put each alternative on the table. Be imaginative and adaptable. What ‘new’ technologies would you be able to utilize?
Your staff. Perhaps look at part-time options for staff, whilst following Public Health England guidance as a base, decide who is required for those parts of the business that are basic to its endurance. Can staff work from home? Make a general arrangement which sees expanded collaboration, work and information being shared, making the business more grounded and less dependent on certain key individuals. Trust your staff and give them additional duties where possible. If you help your staff now, they will reward you for it later when you need them.
Communicate more – talk to everybody who is critical to your business: your clients, your suppliers, your staff, your funders. Don’t forget that they are also are presumably encountering the same problems, and will no doubt be making comparable, frequently difficult, choices. Try & empathise with them and be straightforward, open and practical.
Grab all the help you can get. HMRC have been advised by the government to help organizations affected by COVID-19. A hotline has been set up: 0800 015 9559. Use it. Government grants and Loan schemes will be swinging into action in a matter of days. Take advantage.
If you are struggling to get to grips with cash collection in your business, now is more important than ever to tighten your procedures and collect all invoices over 30 days old. Do not leave it too late because many businesses will be failing over the coming 3-6 months and you need to make sure you are at the top of the pile to get paid. Call us on 01332 565 350 or email email@example.com to see how we can help you collect cash for your business survival.
For more info, here are some very good related articles on COVID-19 help from around the web:
If you are wondering how to collect a debt from a customer (and let’s face it all business owners should sit up and take note of this), we have put together a simple step-by-step guide on the most effective strategy to maximising your collection efforts, and thus increasing cashflow for your business.
Don’t let unpaid invoices get on top of you!
Remember cash is king, and if you are not applying certain techniques and learning tried and tested methods of how to collect a debt from a customer, then you company will struggle to survive, and may see a slide to insolvency. This is what we see in the most extreme cases, so its imperative that you implement strategies into your credit control process that will see results quickly and without wasting time.
(TIP: you do not want to be simply chasing invoices over and over, with little or no results).
How to collect a debt from a customer
So let’s get to it! Here are 3 steps to maximising your efforts when understanding how to collect a debt from a customer:
This is where it all starts. Make them clear, concise and crucially make sure they include details of how to pay you! Sort code, acc number, tel. number to pay by credit card, paypal ID, address to send cheque to. Remember an invoice is a “notice to pay”, so you should make it clear that it needs to be paid.
Schedule calls to your customers “at least” every 7 days. Send a minimum of 2 letters and call 2 times before ever considering issuing legal proceedings through a solicitor, or passing it to 3rd party debt collectors. Your customers will appreciate being reminded to pay as often Accounts Dept can get bogged down, and they only pay when they are chased. You must get your debt to the top of the pile!
Never delay action on a late invoice past 50 days. If you have had no response by this point as in-house collection of debt, you should quickly pass to legal dept or 3rd party for collection. Timing is everything and the customer may have serious financial issues or be closing down, so it is important to move fast.
So there you have it, a 3-step plan to help you learn how to collect a debt from a customer, which will put your company in the best possible financial position when it comes to maximising debt collection efforts.
You will get paid if you do the right things, consistently enough!
Drill this strategy into your credit control team! Take it from us: if your company doesn’t have a strategy for debt collection and escalation, then your company may face a downward slide to insolvency. We see it so many times, but with care and good management your company can prosper.
Remember: timely collection of debts are the oxygen of any business!
If you would like to speak to one of our agents about how to collect a debt from a customer, to help your business prosper in 2020, please don’t hesitate to call us 01332 565 350 or email firstname.lastname@example.org, or use our Contact Us form.
Many of our new clients who have been using a collection agency to collect debt in the past, often ask us why we are better than other agencies, and what our secret is. Our answer is always the same in that our number 1 priority is to have the clients best interests at heart, and to recover as much of the debt as possible within as short a time as possible!
Its not rocket science if you are using a collection agency to collect debt. Yet many businesses fail to see the benefits and will continue to delay and delay, thinking they will eventually get paid, but often don’t for months on end (often years!).
The message to debtors from our side is simple, either pay us within 7 days, or the matter will be moved to a legal process. The debt will then increase substantially incurring legal, compensation and statutory interest costs on top. No-one wants that, and if your debtor is a “can’t payer” we can find a solution quickly. If they are a “won’t payer”, then we can negotiate a settlement often within 3 months.
Preparation is the key to timely collections
It is these small procedural steps that you need to consider when using a collection agency to collect debt, making sure they are meticulous, prudent and firm in their approach to your customers.
Even the government want you to get paid on time!
So we are here to help: here is a list of 3 procedures that you should be taking from your side to maximise chances of collection before you consider using a collection agency to collect debt:
- Communicate: have you done everything to correspond with the debtor, in the right timeline? Are they responsive? Have you spoken to them and found out if there is a specific reason for non-payment? If they are simply unresponsive, then you may want to try and escalation process.
- Provide all docs: does your customer have a copy of the invoice? The number 1 reason for non-payment in business is that the debtor doesn’t have a copy of the invoice. Make sure you email a copy of the invoice on day 1 of the collection process. Way before you ever consider using a collection agency to collect debt
- Iron out disputes: another major reason for non-payment is a dispute with the creditor. You must ensure all avenues of negotiation are pursued before embarking on expensive court action. If a matter goes to court and it is disputed, the costs of litigation can often outweigh the debt. This should be avoided at all costs.
Don’t delay debt collection
So we hope these tips can put you in good stead, if you are considering using a collection agency to collect debt.
There are many effective collection agencies operating in the UK, but you should always do the groundwork. Then you will have peace of mind that you have done everything you can to resolve the situation, and the debtor has been give chance to pay directly.
If you are struggling with finding a collection agency to collect debt and want to find debt collectors that can be trusted, please don’t hesitate to email us email@example.com Or, give us a call on 01332 565 350 for a no obligation assessment of how we can help you improve your cashflow and debt collection rates.
When you first send out an invoice to a customer, the last thing on your mind is debt recovery and what you will do to collect it. In fact, as a small business, debt recovery is probably the most important thing you should consider, and can often be the difference between a long and successful business, and a very short-lived, insolvent one.
The key to debt recovery for small business is really to have a very simple system in place for when things go bad. After all, plenty of customers will pay on time, or certainly within an acceptable timeframe for your cashflow to be sustainable and healthy. So you need to prepare for the worst case scenario for the small percent that don’t pay on time.
Timing is everything
So our advice would be for you to consider a credit policy for your small business if you are going to be successful! Luckily for you, we have put together 3 top tips to keep your small business on top of debt recovery and prosper in 2020:
- Be organised – make sure, once the invoice is sent that you are keeping track of it! Monitor the time it takes for the invoice to become outstanding. In the industry this is called DSO (Days Sales Outstanding). Once an invoice hits 30 days, you should start increasing the chasing of the invoice. Then if after 45 days the invoice is still not paid, you should send a 7-day letter. This is the final demand which can often do the trick.
- Be clear – even before you do business with a customer, emphasise the need for timely payment. Mention it in your telephone conversations. Mention it in your email to them when you send them the invoice. And put it in BIG BOLD letters on your invoices. This just makes you look like a well-oiled operation and actually can improve your customers first impression – which is a good thing! This pre-emptive action reduces the chance of your company every having to think about small business for debt recovery. Trust us, this one tip alone will help you get paid on-time!
- Be determined – if a customer is clearly paying you late and is just fobbing you off with excuse after excuse about why they cannot pay, or keep promising payment and it never materialises, then don’t just accept that situation. You need to follow-through on threats when it comes to debt recovery. At this point you should look at speaking to a 3rd party collection agency to assist you in collecting the invoice.
Debt recovery for small business
You want to avoid bad debt at all costs, and timely collection of invoices is the key to avoiding that. Companies can go bust in a very short space of time and it is essential to be at the top of the payment-pile if you are thinking of debt recovery for small business.
We would always recommend attempting to collect debts before the court stage as this should be a last resort, in most cases the debt can be collected by a collection agency on a contingency basis (No Win No Fee) which means you only pay a small % commission on success, which is a no-risk proposition for you and your small business!
If you are struggling with debt recovery for small business and are wondering how to find trusted debt collectors, please don’t hesitate to email us firstname.lastname@example.org or give us a call on 01332 565 350 for a no obligation assessment of how we can help you improve your debt recovery rates.
According to a recent trade credit report from Credit Insurer Atradius, UK companies saw an increase in invoice collection last year (61%), up from 54% in 2018.
Despite the apparent improvement in invoice collection, it still remained that 35% of invoices produced by UK businesses were outstanding beyond payment terms. And the outlook appears to be that it is only going to get worse.
The report highlighted the fact that one third of businesses (32%) expect the trend to get worse. With over half (52%) expecting a large increase in cases where late payments occur.
In contrast, the data shows that in Western Europe only 36% of businesses expect the late payment culture to get worse.
Brexit and economic factors not helping
The data does not substantiate a feel-good factor, and industry experts are warning businesses to heed caution in 2020. With the uncertainty over Brexit continuing, credit control experts are warning that it may get worse before it gets better.
Rather grimly too, the outlook predicts that the UK will be the leader in insolvency rates, compared with the rest of Western Europe. With the UK showing a rise of 10% in 2019, and a prediction of a further 5% rise in 2020.
Late payments can cause huge problems for businesses
It’s also interesting to note from the report, that UK businesses are allowing less and less time for customers to pay their invoices, going from 24 days, to 20 days according to average payment terms. In comparison with the rest of Western Europe, this figure sits rather high at 34 average days to allow customers pay their invoices.
This narrowing of an invoice collection window across UK businesses is expected to be as a result of a worsening late payment culture, expected in the coming months. Thus further forcing cash-strapped company owners to collect ever quicker before delays can materialise.
Companies consider discounts to improve invoice collection
Rather interestingly, the report also notes that just under half of UK businesses surveyed (42%) would consider a discount on their invoices to ensure timely invoice collection.
If you need help with invoice collection, or are suffering from the inability to pay suppliers and would like to speak to someone about insolvency, we work closely with trusted Insolvency Practice partners who would be happy to discuss your situation in the best interest of both parties.
As we approach Christmas and New Year 2020, more and more business owners will be searching for debt collector companies. More often in a bid to collect as many payments as possible, particularly before the *long Winter break.
*believe me for some businesses the Winter break is a long time!
So its important that you keep on top of your cashflow around this time, but its also equally important to know which debt collector companies you can trust. Particularly, how professional they are.
On a few occasions this year we’ve had clients come to us to collect their debts after having had experience of other agencies. They enquired with us quite simply because they failed to collect their debts. They also provided hardly any feedback throughout the process, often charging a disproportionate fee to instruct them as agents, to never see them again.
Debt collector companies
When dealing with debt collector companies, we would always recommend you look for at least 4 things before choosing which one to go with:
1. Reputation – do they have an online presence (and we don’t just mean a website here, although that is a start). How good is their website, does it look like it took them 30 mins to put it together on a cheap do-it-yourself website builder? Do they have an active social media presence? Do they have testimonials which are NOT on their website (because these can be easily made up)? Or are the testimonials on external sites such as LinkedIn and Google? (these can’t be made up – or at least require much more effort!).
2. Professionalism – how professional do they sound when you talk to them? Do they give you multiple options for collecting the debt such as chasing by phone and letter, solicitor involvement, court proceedings, insolvency? And what happens if its disputed? These should all be considered when you are talking to debt collector companies. They should also have the answers instantly to any queries you have.
3. Coverage – are they located close to you and your debtors? Its imperative that debt collectors have a national presence so that they have the ability to collect debts UK-wide. Many collectors will only focus on the South East, or London as this can be a more corporate environment which will earn them bigger commissions.
4. Affiliations – are the debt collector companies highly regarded in the industry? Are they a member of a local business club, FSB, or Chamber of Commerce? Do they work with solicitors and how do they work with solicitors? Its crucial that you check who they work with and how, in order to build trust in that debt collector.
Its all about trust
The list is not exhaustive, but these are just some of the considerations you should give if you are looking for debt collector companies. Remember they will be representing your business in collecting debts, so you need to trust them!
If you are wondering how to find debt collector companies that can be trusted, check out our testimonials. Or to make contact, please email email@example.com or call on 01332 565 350 to see how we can help you improve your cashflow and debt collection rates.
How to hire a collection agency to collect a debt – in 3 simple steps!
If you are wondering how to hire a collection agency to collect a debt, check out our testimonials. Or to make contact, please email firstname.lastname@example.org or call on 01332 565 350 to see how we can help you improve your cashflow and debt collection rates.
Check out our Youtube channel for more useful videos:
Our clients know that debt collection agency charges are a big factor in deciding how to collect their debts, and that is why we always compare our debt collection agency charges with competitors.
Time and time again we have found our service to be effective and good-value for our clients. We have a high success rate of collections when it comes to improving cashflow and reducing exposure to aged debt for our clients.
Our priority is for debt collection agency charges to be appropriate to the vaue of the debt, and that is why we use a sliding scale when it comes to commission charges. We only charge on success, so you can be safe in the knowledge that your best interests are at heart, and our rates will never be excessive.
Debt Collection Agency Charges
See table below for the range of charges.
For invoices 0-6 months old:
|£ invoice||Commission Fee|
|1 -500||min £50|
|501 – 5000||12%|
|5,001 – 12,500||10%|
For invoices 6-12 months old Add 5% to each value
For invoices 12+ months old Add 10% to each value
We find that age is important when assessing the collectability of a debt, and debts become more difficult to collect the older they get.
Debt collection agency charges can vary from one company to another, but we have a general guide on application of our service, and often each case is judged on its own merit so it always worth contacting us to discuss your specific cases so we can tailor a solution to your needs.
Simplified debt collection rates, starting @ 8% commission
If you are looking for competitive debt collection charges, then look no further than us as we leave no stone unturned to help your company collect what is rightfully owed.
Please don’t hesitate to email us email@example.com or give us a call on 01332 565 350 for a no obligation assessment of how we can help you improve your cashflow and keep your collection costs low!
Check out how we work with UKTC Trades Confederation to help collect commercial SME debts