In normal circumstances a company will ask for an invoice to be settled in the month after the invoice date but this must be specified in the contract and agreed by both parties, in writing. In the absence of such an agreement then in the event of dispute the law specifies 30 days from the invoice date as the last date for payment. Late payers can be the bane of small company cash flow, as there may be a regularity to some; maybe they settle two months after the invoice date or maybe they are typically on time but are on occasion late. In any event it makes life tough for the small company to map out the future work as they may have to pay for goods that were part of the job concerned and whilst they may well have revenue to pay their suppliers, they may have to buy further supplies for other contracts and pay salaries, naturally. The late payer can cause difficulties in creating a shortfall in the accounts later on when it is time to pay their own bills, so how can the small company advise the debtor to pay up without losing a valuable client? In any event the last thing the creditor wants to occur is to be obliged to write off a debt, so they must make the effort to collect them.

For a small company the option may well be between doing the Debt collection in-house, handing it over to a solicitor or commissioning a Debt collection agency. The last two options can involve significant costs for a small organisation and so may be discounted by many. The internal option will demand dedication in employee time, but by the use of a professional Debt collection software application the time spent can be optimised to do the work efficiently. Some applications are inexpensive, not cheap, and are available for under £50 including VAT. They might come with either templates for the Debt collection letters or samples and instructions in the accompanying manual or e-book. These Debt collection letters are at the centre of the Debt collection process as they are what the debtor will see and can make or break the success of the process.

The Debt collection letters should be edited in cool, unemotional and formal language so that they do not upset the debtor, whilst at the same time demonstrating to them that the creditor is serious. Ideally the Debt collection software should have templates as this should make the action of composing the Debt collection letters not difficult, next best would be an e-book, such as a pdf file from which example Debt collection letters can be taken and then changed to customise them for the debtor company. The least preferable method is to have to manually edit a letter from an instruction manual as this it time consuming and can be liable to errors, which are NOT wanted in Debt collection letters.

The manual should lay out the steps of the Debt collection process and the Debt collection software should also use these steps for carrying out a Debt collection action. This procedure should recover many debts and will hopefully be a reminder to the debtors that you must be paid in timely fashion next time. However if the creditor has to escalate a debt to using the legal system should the in-house process fail; the Debt collection software should have the functionality to record the activity at each step of the process, including those carried out while using the Debt collection software and other activity, such as received letters. In this way there is a record that the creditor has made serious efforts to do the Debt collection already.

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