In the vast majority of times the first move that a creditor should take when an invoice is unsettled after the accepted credit period is to get in touch with the debtor, by way of a phone call, personal visit or non-threatening letter. If any of these approaches do not make the debtor pay the invoice then the creditor will need to consider what move to take next. If the creditor has suffered late settlement of accounts before they could have evolved a procedure for dealing with it and so would probably just carry on and take that course of action. If however, this is the first time, or maybe they had been unsuccessful in previous debt collection situations, they would be advised to investigate their options.

These in reality boil down to three; engage the services of a solicitor, or a debt collection business and thirdly, look for some debt collection software and perform the job themselves. There are pros and cons to each choice, with the solicitor the creditor is paying for experience, especially if the solicitor has extensive experience in commercial debt collection, when they might be able to get settlement quickly. Their charges might be for the total number of debt collection letters, or maybe a percentage of the debt on collection.

The debt collection business may be more difficult to choose unless they have local offices, otherwise it means browsing the Internet and then either choose based on web site information, or after contact with them. What would not be so easy to work out is how professional they are when approaching a debtor on the creditor’s behalf, since any behaviour that is confrontational may well reflect on the creditor and could give them a bad name with the business community. It is hoped that such bad debt collection companies are in the minority, but if possible the creditor should try and find past customers of the Debt collection business and see what they say. The charges for a debt collection business are may be calculated as a percentage of the total debt owed and probably have expenses added on top of this. Some may offer a no win – no fee deal, but it is unlikely that such a debt collection business would not win, and it depends on what is classified as a win; part settlement, no matter how low might be a win, but it would be most likely that the fee would indeed be calculated on the total debt.

The Debt collection software method should allow the creditor to have full control of the debt collection process, create their own Debt collection letters from instructions in the manual or perhaps by using templates that should be part of the debt collection software. To get the best out of the debt collection software the creditor would have to allocate some resource to its operation, perhaps make it a part of a current employee’s job description. For this in-house option the important subject is to understand how the debt collection process functions, what legislation is available to help a creditor and how to create debt collection letters that are effective in persuading the debtor to settle the bill. This method has a useful cost benefit in that any solicitor or debt collection business wil charge a fee for each debt collection, whereas the debt collection software is a purchased item and can be reused over and over again with only minimum outlay, such as postage and printer consumables.

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