An Expert Guide to Debt Collection
Being owed money is a common occurrence for both businesses and private individuals in the UK. A recent study indicated that 4 out of 5 businesses are owed money, and this is mostly a result of unpaid invoices or payment disputes.
It is no secret that businesses of every size, both large and small, deal with the issue of debt. Smaller companies, freelancers, sole traders and those that are self-employed are also affected by non-paying clients, and in many cases, this can often present more problems for them.
For example, a large company may have an in-house credit control team that can chase a client for payment. Someone self-employed may not have the time or resources available to do this, as quite often it may mean that they are unable to work on a project that can grow the business.
Private individuals also suffer from the issue of debt, and it is common for people to loan friends or family members money only for them to later withhold a repayment.
Regardless of the events that have led to the creation of the debt, the situation needs to be resolved quickly and in the appropriate manner. There are several different ways of accomplishing this, such as legal action or by using a professional debt collection agency.
Explaining the Different Types of Debt
When deciding on a course of action, a specialist in your specific type of debt is always preferable. Whilst the term ‘debt’ can be universally applied to any occasion where someone owes money to somebody else, debt can be broken down into one of three main categories.
A commercial debt, or ‘business debt’ as it is also known, can be applied to any situation where a business is owed money. This may be from either another business or a private individual. For example, one business may have provided goods or services to another company and issued an invoice for payment. If that invoice is ignored, this would be a case of commercial debt.
Most B2B commercial debts are typically high-value, as most companies deal in large amounts of money. However, many companies are also owed small amounts of money by all manner of clients. For smaller debts, a decision must be made regarding whether it is cost-effective to recover the debt. On occasions like this, it is normal for a commercial debt collection agency to become involved to recover a portfolio of debts.
Private debt is any owed money that results from a personal arrangement. Examples of this could include situations where one person has loaned money to another privately, perhaps to help them out during a difficult time. If that person later chooses not to repay them, the money that is owed can be private debt.
As with commercial debts, many specialist agencies handle cases of private debt. The value of private debt can be both low or high, and in many cases, people can be owed hundreds of thousands. When considering options, it is better to look at a specialist debt collection agency that has experience dealing with cases like this.
Any debt that is cross-border and owed by someone in another country can be classed as an international debt. This can be either a business or a private debt.
Specialist knowledge and expertise are required to recover an international debt and many debtors think that they do not have to pay as they are out of reach of any consequences. This is far from the truth, and an international debt collection agency will be able to recover money owed overseas.
Recovering a Debt
As with any financial matter, there are many ways to resolve the issue of recovering a debt.
Whilst the main objective will always be to recover funds that are owed, it is also of critical importance to resolve the matter effectively and amicably. In the case of a company, this is even more important, as future business opportunities must not be jeopardised.
Many people and businesses look to recover the debt themselves. There are certain benefits to doing this, but it is important to set a cutoff point, as spending too much time chasing a debt can consume too much time and money.
Before committing to a course of action, it is also worthwhile contacting the debtor and professionally reminding them of their payment obligations. In many cases, this is sometimes enough to prompt them into paying.
Instructing a specialist debt collection agency is the most effective and low-cost option, and will ensure that your case is dealt with promptly and professionally.
For private debt collection, Frontline Collections are the UK’s foremost experts, specialising in every working sector as well as winning numerous awards.
Regardless of the method of debt recovery, you should always factor the cost into your decision making. Debt collection agencies are a desirable solution due to their effectiveness and low cost, whereas going through the country court process can become very expensive.