If the small company has been carrying out work or delivering items to the larger company for some time, perhaps years, the odds of a late settlement now and again could be fairly high, after all we all make mistakes don’t we? However in the current recession, the small company could need payments on time from all clients and hope that some of them will settle before time. If the bill to the larger company is of a high value, even in just small company terms, say a couple of thousand pounds maybe, then this could have a serious effect on their cash flow, after all they will have their own invoices to pay on time and the unpaid bill could make the difference between success and failure. If the professional relationship has been built up over years then the last thing the small company will want is to throw all that away by going straight for Debt Collection methods, such as a legal practice or Debt Collection organisations, where strong Debt collection letters could get sent out.

The small company should communicate with the larger company to try and get to know what has changed. The pro here is that it could turn out to be a oversight which could be out right quickly and it also helps to keep the professional relationship. The possible con is that if the larger company is having financial problems then they might play for time instead of being open and try and make the small company wait longer that they should.

If the small company finds that they are not going to get the bill paid then they could well look into Debt Collection procedures. There are two what could be described as conventional procedures; a legal practice, or Debt Collection organisations, which specialise in commercial Debt Collection. The pros here are that they should bring expertise in composing good Debt collection letters and also have the workers and the time to devote to the Debt Collection operation. They could well have a sample demand letter as an example of their past work. The cons are largely the cost of that expertise, workers and time, where fees of around 10% and more are normal, and if a court appearance is recommended then the fees can rise even higher. One more con is that these fees are chargeable for any future debts they deal with. There is a third direction, that of Debt collection software which will allow the small company to take on the Debt Collection operation from under ?100 and once installed it can be set up for any future Debt Collection. The cons are that the small company will have to make resources available themselves, such as workers to operate the Debt collection software and write the Debt collection letters, a printer to produce formal copies of the Debt collection letters, although this could be an existing office printer, and finally a new computer could be required. Provided the small company selects wisely and buys a Debt collection software package that provides a good documentation, which explains the Debt Collection operation in detail and also how to write convincing Debt collection letters, relevant to each stage of the Debt Collection operation. The provision of a sample demand letter for these Debt collection letters would help the workers to write effective Debt collection letters of their own that should prompt the larger company to pay the bill, especially if they find more Debt collection letters arriving, sent as part of a structured Debt Collection plan.

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