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Lots of small traders and lots of not so small companies appear to create a huge abyss between their everyday accounts management systems, and their procedures for recovering seriously overdue invoices. Actually an incredible number of companies simply don’t have an established debt collection process. This is a very widespread, but elemental and hazardous gaffe to make.

If you consider it, it’s fairly unnatural to have this divide between everyday accounts management and overdue debt collection. The switch from one to the other is in principle made the moment an invoice is one day overdue, but it would be harmful for business if you simply handed over all such accounts to a debt collection specialist. It would cost you serious amounts in fees and would badly alienate many of your customers.

The best approach to this problem is to keep the whole procedure in-house, making the switch from credit accounts management to the debt collection process a wholly smooth experience from the clients’ point of view. It should also be part of a smooth process as far as your internal systems are concerned. Your Accounts Management Team should be pre-armed with a set of debt collection letters that basically form the heart of your debt collection process.

Your first debt collection letter from the debt collection process ought to be a natural and unnoticeable follow-on from your last normal Accounts Management letter. The debtor should not realise that he’s crossed from one system to another. Nonetheless, it’s very important that reluctant or slow payers are speedily made to understand that they are involved in an ongoing, unrelenting process that will inescapably lead to them paying their overdues. Your process needs to also make it patently obvious that the longer the debtor stalls, the more he will pay.

Remember, throughout the European Union, all countries are required to have a law in place which allows businesses to add administration fees and daily interest to all overdue invoices. The Creditor can do this without needing to seek the courts’ permission.

Fortuitously, there are now commercially available overdue account collection systems which present the small business manager with a full commercial debt collection process. The best ones are also perfectly compatible with bigger operations, and will include:-

An administration system to make it easy for you to track & easily follow up on overdue debts

An easy tool to reckon the administration fees and ongoing interest.

A progressive set of debt collection letters designed to progressively turn up the pressure and cost until the debtor accepts that this is the debt that must be paid as an absolute priority.

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