Collect business debt, don’t write it off!

According to the Credit Strategy Magazine, “SME’s wrote off a combined total of £5.8bn of debt in the last financial year.”

The small business guide says that, “typical UK micro-businesses write off an average of £1,804 in unpaid invoices per year. With five million micro-businesses in the UK this equates to a total of over £9 billion written off in unpaid invoices last year.”

It’s simple, people should pay you if you have provided a service or sold a product to their satisfaction.

Recently we received a referral from a company who was going to simply write off a debt because the customer just never got back to them. We obtained the overdue monies, plus interest and a late payment fee within 48 hours! It cost our client five minutes of her time and we did the rest.

Many business owners do not have time or the resources to chase debts owing to them. Others said that they didn’t want to risk losing their customer by chasing them for a payment.

Using a “third party” debt collection agency and separating yourself from the customer makes the process more effective, whilst you maintain a relationship with your customer. Especially if the debt collection company you use has customer retention as their first and foremost goal.

What you need to consider before writing off an unpaid invoice:

  • Under The Limitation Act 1980 you can chase a debt for up to 6 years. Is the debt over 6 years old?
  • Can you solemnly declare that you have exhausted all avenues to collect the debt? Have you sent late payment letters, emails & called the customer? Did you try paying them a visit to ask professionally for the money owed? Have you contacted a debt collection agency?
  • If there is a dispute have you tried mediation, compromise or negotiation with the debtor?

When a debt should be written off:

  • When the company has gone into liquidation find out who the Liquidators are and add your name to the creditors list.
  • If you have tried a debt collection agency and they have been unable to collect.
  • If you have been unable to trace any whereabouts, name, address, email of your debtor and you feel you have exhausted every avenue. Leave them on your ledger for up to six years, just in case they do show up somewhere.

In future before writing off debts please consider the above factors before doing so. Collect business debt, don’t write it off!

Before you do decide to write off another debt, let us try to collect it for you call us on 01494 422742

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