In the current recession, when a small company has been providing services or products to a large company on many occasions, it might be a shock when their last bill has not been settled by the agreed last payment date. If the large company has kept up a good settlement record in the past then the small company might feel that they have a good enough professional relationship that they don’t want to damage by going right into Debt collection strategies and despatching Debt collection letters. If the small company has a late payment clause in their terms and conditions then they needs to apply this, but do it in an ethical and professional way, also keep the large company informed of what they are going to do as this should not damage the professional relationship.

It might be that the small company has not had to take care of Debt collection in the past and might now need to check out what their strategies are. While they might be happy with despatching invoices and then a reminder for a late payer, they might be less happy with composing Debt collection letters. In any business decision, there are many influences but finance will always be one of the crucial influences and in the Debt collection world the cost can vary greatly between the various strategies. There are three significant strategies for Debt collection; a lawyer who has talent in Debt collection, a Debt collection company with commercial expertise and finally, Debt collection software. The first two strategies allow the small company to hand over the Debt collection activity to a third party, while the third strategy brings the Debt collection activity in-house. As might be expected the cost associated with the three different strategies are very different as the lawyer and the Debt collection businesses will usually set theircosts as a percentage of the debt which might come to be a significant sum, although some might offer a no win no fee deal. On the other hand the Debt collection software might well cost under £100. The major difference here in cash terms is that the lawyer and Debt collection businesses would charge for all future Debt collection they were requested to manage, whereas the Debt collection software is one off purchase and so would only require running costs such as paper, printer consumables and postage costs.

The Debt collection software would also generate a cost in workers terms since a worker would need to be allocated to use the Debt collection software, at least as one element of their job. The small company might feel that a second worker who could be trained up would provide cover for sickness, holiday or other absence, all taking time away from their normal work. The key part of Debt collection is to create convincing Debt collection letters, which the lawyer and Debt collection businesses needs to be comfortable with, while to compensate, the Debt collection software would need to provide a set of instructions and samples of Debt collection letters. The Debt collection software needs to advise the small company of the requirement for a plan of action and in this context there needs to be samples of Debt collection letters that are appropriate for each stage of the plan. The small company might need to tailor the Debt collection letters around any late payment clause in their terms & conditions so that they look professional to the large company.

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