[S942]State Debt Recovery Office

According to a study carried out by Leeds University, 30% of bad debt is an outcome of cash flow issues, or badly managed systems that hold up invoice payments. Keeping this in mind, it only seems logical to think of debt recovery as a feasible option.

Sometimes all you need for your debtors to release payment is a letter from a third party debt collection agency, explaining that they have been officially appointed to collect the debt from them. If you are worried that appointing a third party debt collection agency will spoil your relationship with your clients, don't worry. More than likely, your clients will be able to understand that what you really want is the payment for the services you have already given them.

In order to get results, you need to choose the best debt collectors in the industry. That is because commercial debt collection is a structured process. Let's take a quick look at how it works.

1. Raise invoices for your clients as usual.

2. Keep pursuing payments by sending reminder letters, emails, and calling up your clients. If you don't get paid within 60 days, this is termed as bad debt.

3. Contact a reputable debt collection agency for your debt recovery project. Once you give them the details of all the bad debt you have accumulated, they will advise you on the next course of action.

4. Basically, they suggest that you send a "Letter before Action" letter, also known as the "The 7 day" letter. This letter specifies that if the client doesn't release the payment within 7 days, a third party debt recovery agency will take over and recover the debt on the behalf of your company.

NOTE: Remember if you accept a payment that is less than the amount you billed your client for, it will be taken as an offer of settlement. So, avoid such a scenario and request and accept only full payment. However, if you get a cheque amount that's less than the billed amount, simply reject it, unless it's acceptable for you to accept whatever you get.

5. If the 7 day letter doesn't get you the payment, a second letter will be sent to your client stating a specific date for making the payment or face a court order.

6. If the 2nd letter also doesn't get the debtors to pay, then the debt recovery agency will get a court order to resolve this matter.

The debt recovery agency will keep you updated on the progress at every step. They will also contact you and provide advice on legal steps which are available to help recover your debt and get your business back on its feet.