In the UK, many businesses and individuals will find themselves in situations where they are owed money by someone.
When this happens, it can be an extremely challenging scenario, especially if the cash flow of a business is to be put at risk.
Research shows that at the end of June 2021, around 1,742.7 billion pounds was owed by people in the UK.
Maintaining a steady cash flow is by far one of the most important practices an organisation can carry out.
Knowing how to deal with someone that has intentionally left payments unpaid can cause stress and anxiety.
This is especially true if you are uneducated in the ways of debt collection and the other processes for recovery.
No one should have to deal with the difficulties of someone owing money that is rightfully theirs.
Some businesses may not have enough internal resources to be able to carry out the recovery of debts.
Thankfully, many methods can be investigated to ensure a successful recovery of monies owed.
In this guide, we have put together five of the best methods in which you can prevent the occurrence of unpaid debts.
Top 5 Tips for Recovering Money Owed
We have put together this how-to guide to give peace of mind to all those that are affected by bad debtors.
We understand the difficulties that this can bring, especially if you are the owner of a small business.
Carry Out Credit Checks on Your Clients
When you are introduced to a new business prospect and they want to go ahead, we recommend that you carry out a credit check.
Credit checking sites, such as Experian etc, are designed to give you an accurate view of an organisations credit history.
If the credit file shows as amber or red, this will indicate whether or not the business is likely to pay you for any services you provide.
If the credit check results in green, you should still take precautions and check this every few months.
This will give you an up-to-date outlook on your client’s finances.
The use of Payment Terms is a common procedure in many business credit control teams.
These are contracts that are agreed on and signed at the start of any proposed works.
Payment Terms outline how much is to be paid, on what date this is paid and any other caveats related to the finances.
Implementing these means your client cannot get away with not paying, as they have signed a contractual agreement.
Ensure to keep constant communication with your debtor so that they know you are serious about getting the money back.
You must be careful not to overdo your communications, as the person that owes you money could report you for harassment.
This may also give them grounds to withhold your money for even longer.
Sending them an email or letter that states they have not paid are usually enough to receive prompt payment.
Ask For Payment or Issue Payment Reminders
If you are owed money by someone, do not be hesitant in asking for this to be paid – after all, the money is rightfully yours.
A polite conversation with your debtor asking for payment is commonly known to produce a payment.
If they continue to leave their debts unpaid, you can send a payment reminder letter.
This should state the amount that is to be paid and on what date this was due.
“Invoice overdue letters” are used in almost all credit control teams to assist in the recovery of unpaid invoices.
Instruct A Professional Debt Collection Agency
Have you tried all of the above tips and are still without payment from your debtor?
If this is the case, it is time for you to contact a professional debt collection agency.
A debt collection professional is by far the best choice when it comes to recovering money that is owed.
No debt collection agency is the same, as there many different types of debt to recover.
These include Commercial, Private/Personal and International Debt.
For example, Federal Management is regarded as the UK’s leading agency for Commercial Debt Collection.
There is a cost to this service, however, you would have to pay twice as much if you were to try to recover independently or use Solicitors.
Affordability is extremely important for any business that is suffering from money that has not been paid.
They are known to help with the continuation of the business, by not jeopardising relationships with the client.
Take the necessary measures today to ensure you get the money back that is rightfully yours!