When a debt cannot be recovered through other processes and means, it may become necessary to pursue recovery of the debt through legal proceedings. This can be quite a serious course of action and often marks the final approach available to obtain payment for products or services previously provided to a customer.
Specialist debt services are best placed to work with and on behalf of businesses of different types, sizes and purposes to try to recover the funds that it is owed. Debt collection agencies are skilled and experienced in pursuing debtors and negotiating payment and have a range of effective tools and sources of information available to them to hasten and increase the effectiveness of debt recovery processes.
A little bit about debt recovery
For businesses that offer credit arrangements to customers, the reality is that bad debts may still occur, even when comprehensive credit management policies and procedures are in place. A range of methods, characterised by varying degrees of severity can be used to try to recover bad debts. Many businesses endeavour to use debt recovery strategies that are fair and appropriate but will still allow for a good relationship to be maintained with the customer or client.
However, the fact of the matter is that a breach of contract occurs when an invoice is unpaid, according to the terms and conditions of the credit arrangement. It is not completely uncommon for a dispute to come about when the different parties involved with a contract do not comply with what they agreed to do €" essentially, paying for the services or products that have been provided.
When this is the case, there are four main options for debt collection:
Taking a personal approach in terms of communication and consultation with your customer. Sometimes, customers have simply overlooked the need to pay their invoice by a particular date and, in the best circumstances, respond well to a gentle and friendly reminder;
Issuing a written request €" that is in effect a letter of demand €" to have the debtor settle their account;
Involving a debt collection agency;
Initiating legal action.
Success rate
No matter the course of action that is appropriate in your situation, it is vital that prompt action is taken to chase overdue invoices. Such communication should occur the day following the invoice being due.
Through positive communication with a customer/debtor, it is sometimes possible to take short-term problems into account and agree on a course of action that works for both parties. This will often depend on how valuable a client is to your business.
Receipt of a letter of demand provides your debtor with the chance to settle their debt and thereby avoid the monetary expense and time lost through legal proceedings. If legal proceedings do eventuate, it is very important that you have a copy of the letter of demand that was issued and a debt collection service can provide useful assistance with developing such a letter.
Escalating debt recovery to legal proceedings
Sometimes, legal action is the only option that offers a real possibility of recovering a debt, even though it may take time away from your business and incur costs charged by the debt collection agency, as well as legal and court costs. It is highly likely that steps will need to be taken to obtain credible legal advice. Note that specialist debt collection agencies will often have onsite, integrated law firms that can provide such services.
If you issue a letter of demand that warns of legal action being taken if the debt is not paid, you need to be prepared to follow through with this. Before warning a client in this way, it is important to be aware that legal proceedings have the potential to be expensive, time consuming and complex. It is also useful to be aware that different courts deal with different debt recovery disputes depending on the amount of money involved. However, and with a complete understanding of the possibilities and limitations of legal proceedings, in some instances legal action is worth the expense and inconvenience in order to increase the likelihood of recouping outstanding funds.
Escalating debt recovery to legal proceedings is a valid course of action when payment for goods or services cannot be secured from a debtor. While legal proceedings can present significant complexity and expense, working with a debt recovery service and accessing their guidance through the process can facilitate good results for your business.
Specialist debt services are best placed to work with and on behalf of businesses of different types, sizes and purposes to try to recover the funds that it is owed. Debt collection agencies are skilled and experienced in pursuing debtors and negotiating payment and have a range of effective tools and sources of information available to them to hasten and increase the effectiveness of debt recovery processes.
A little bit about debt recovery
For businesses that offer credit arrangements to customers, the reality is that bad debts may still occur, even when comprehensive credit management policies and procedures are in place. A range of methods, characterised by varying degrees of severity can be used to try to recover bad debts. Many businesses endeavour to use debt recovery strategies that are fair and appropriate but will still allow for a good relationship to be maintained with the customer or client.
However, the fact of the matter is that a breach of contract occurs when an invoice is unpaid, according to the terms and conditions of the credit arrangement. It is not completely uncommon for a dispute to come about when the different parties involved with a contract do not comply with what they agreed to do €" essentially, paying for the services or products that have been provided.
When this is the case, there are four main options for debt collection:
Taking a personal approach in terms of communication and consultation with your customer. Sometimes, customers have simply overlooked the need to pay their invoice by a particular date and, in the best circumstances, respond well to a gentle and friendly reminder;
Issuing a written request €" that is in effect a letter of demand €" to have the debtor settle their account;
Involving a debt collection agency;
Initiating legal action.
Success rate
No matter the course of action that is appropriate in your situation, it is vital that prompt action is taken to chase overdue invoices. Such communication should occur the day following the invoice being due.
Through positive communication with a customer/debtor, it is sometimes possible to take short-term problems into account and agree on a course of action that works for both parties. This will often depend on how valuable a client is to your business.
Receipt of a letter of demand provides your debtor with the chance to settle their debt and thereby avoid the monetary expense and time lost through legal proceedings. If legal proceedings do eventuate, it is very important that you have a copy of the letter of demand that was issued and a debt collection service can provide useful assistance with developing such a letter.
Escalating debt recovery to legal proceedings
Sometimes, legal action is the only option that offers a real possibility of recovering a debt, even though it may take time away from your business and incur costs charged by the debt collection agency, as well as legal and court costs. It is highly likely that steps will need to be taken to obtain credible legal advice. Note that specialist debt collection agencies will often have onsite, integrated law firms that can provide such services.
If you issue a letter of demand that warns of legal action being taken if the debt is not paid, you need to be prepared to follow through with this. Before warning a client in this way, it is important to be aware that legal proceedings have the potential to be expensive, time consuming and complex. It is also useful to be aware that different courts deal with different debt recovery disputes depending on the amount of money involved. However, and with a complete understanding of the possibilities and limitations of legal proceedings, in some instances legal action is worth the expense and inconvenience in order to increase the likelihood of recouping outstanding funds.
Escalating debt recovery to legal proceedings is a valid course of action when payment for goods or services cannot be secured from a debtor. While legal proceedings can present significant complexity and expense, working with a debt recovery service and accessing their guidance through the process can facilitate good results for your business.