Tired Of Chasing Your Fees From Your Customers? Find Out The One Trick That Could End All Your Debt Collection Issues?

Businesses and accounting departments are wasting vast amounts of time and resources chasing down overdue debts when that time would be better used advising their sales teams on who they should be doing business with or not.

According to an online poll done by Debt Register in 2021, a new digital payment platform, nearly a third of all firms spend up to three-quarters of their time collecting overdue payments when they could be doing something else.

Teams in the healthcare industry spent the most effort pursuing down debts: From medication companies to care providers, 80 percent of organisations questioned spent 51 percent or more of their time on the phone or emailing to collect money that was legitimately theirs.

The manufacturing industry were also struggling to be paid 44 percent spent more than half of their time looking for money, and more than a fifth spent significantly longer.

Overdue payments consume exactly half of the time spent by employees in the IT industry, and a similar picture occurs in banking and finance (48 percent spent more than half of their time chasing down overdue payments).

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The Problem

With so many small businesses failing due to overdue payments, this is certainly a huge hurdle to overcome if you want your firm to succeed.

It is vital to remember that if the debtor does not acknowledge or settle the amount within six years, the debt becomes unenforceable under the Limitations Act, which means you cannot take legal action to recover it.

There are various characteristics of potentially tardy clients’ behaviour that should set alarm bells ringing if you detect them.

These are some examples:

• They are difficult to reach; your letters, e-mails, and phone calls are increasingly being ignored.

• They are hesitant to negotiate payment terms.

• They fail to keep their payment assurances.

• They begin to make excuses early, for example, by moaning about services or employees.

You will save time and money later on chasing bad debts if you detect possible issue debts early on.

However, if it is too late and your debts are becoming out of control and giving you significant hardship, it may be necessary to seek the assistance of a solicitor or a professional debt recovery organisation.

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The Solution

If you have always had a good working relationship with a particular individual or company and have always felt comfortable entering into a business relationship based on a “gentlemen’s” agreement or a more informal agreement rather than a written agreement, you may become one of “those” businesses that spends the majority of its time chasing overdue payments.

Regardless of the strength of your business relationship, a written contract or agreement is required, especially when it comes to payments and payment terms.

What is the trick?

The key trick is to include in the agreement that if the customer does not pay, they are liable for all legal fees incurred in order to recover the payments. This means that if you take your customer to court, he/she will be liable to pay your lawyer’s fees which is the most expensive aspect of chasing debt.

This clause would encourage your customer to think twice before they ignore your first email chasing debt. This is the most effective method for resolving all debt collection issues and eliminating the need for legal action due to unpaid invoices.

Why Else Is A Contract Necessary?

The most significant advantage of a written contract is that it gives proof and clarity of what has been agreed upon between the parties (if carefully drafted by a Litigation Lawyer). The parties’ agreed-upon terms should clearly explain each party’s obligations, rights, and duties under the contract, reducing the possibility of any disputes or misunderstandings about what was agreed.

If there is no formal agreement, the parties may be forced to piece together bits of correspondence or verbal conversations, as well as legally implied agreements, to determine the parameters that govern the partnership. This method lacks assurance and can lead to expensive and time-consuming disagreements between parties.

Entering into a written contract with the counterparty is the best approach to accomplish this. Only then can a company have a complete grasp of its exposure and risk under the contract.

A written contract also allows you to provide extra safeguards that may be necessary to balance the risk under the arrangement but would not apply if not mentioned in writing. The solution is to always have a formal agreement before doing any job for anyone.

Summary

Many firms do not have a formal agreement in place, and when anything goes wrong, the conflicts are frequently compounded by the lack of a written agreement, making them more expensive and time consuming.

Relying on a “gentlemen’s” or informal agreement to save time and money on drafting a written contract may end up costing you much more in the long run if a disagreement occurs.

If you haven’t got any agreements or contracts in place, then Mishoura can assist you in locating a Litigation lawyer in your area.

Their experienced team can, following an initial consultation, supply you with a concise list of experienced, competent litigation or business lawyers that can assist you in drafting contracts and agreements for use between you and your clients, ensuring that all payment terms are set out in black and white.

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