Small Business Debt Collection

There are some particular challenges for small business in collecting debt. Often you will not have the necessary resources to employ someone to collect debts or to get a debt collection agency to do this for you. However, these resources would be particularly useful if you have a difficult debt collection situation which results from the debt being very large (which can have disproportionately large impact on on you as a small business) or the debtor being particularly recalcitrant where they simply refuse to pay or wrongly dispute their liability to pay the debt or offer excuses for not paying which are not valid.

So how can you recover your debts as a small business?

Some very valuable analysis you can conduct is if the debtor has the capacity to pay. If they have any significant assets which they can draw on or if they any income from working then they can use to pay a debt off over time. If you can do some searches on properties owned by the debtor or company searches to see if they have any shares or directorships of a company this will help you identify if they are worth going after.

Once you have established that they have the capacity to pay the debt, then you can begin enforcing it. The natural first step is to call the debtor to make sure they have not simply forgotten to pay you or that they have bad administration which means that they have not payed you because they have lost your invoice or never received it in the mail. Many debts can actually be resolved in this manner. However, if you are not able to recover the debt in this manner then you will need to start sending documentation to the debtor. You should begin by sending a reminder of the debt owing. This is normally a simple letter which states that the debtor owes a certain amount and reminds then that the account is overdue and that, if you charge interest on late payments, this cost will be incurred on them. If they do not respond to this, you can send a letter of demand. This is stronger letter which details the documentation which proves the owing of the debt and such as invoices, contract documents and any other documentation which proves the existence of the debt. A letter of demand will then state the total amount to be paid and give a specific time frame for when the debt must be paid by and then state that legal action will commence if the debt is not paid within this time frame. We have a debt collection letter available here which you can purchase by clicking below.

If a letter of demand fails to move the debtor, then you will need to resort to legal action which will involve filing a statement of claim. It is highly recommended that you seek legal advice before engaging with the legal system in this manner, and we have legal service providers available for this purpose, all you need do is click below to obtain their services.

Debt Collection Letter Resources