In the vast majority of situations the first move that a creditor should carry out when an invoice is unpaid after the contractual credit period is to get hold of the debtor, by way of a phone call, personal visit or non-threatening letter. If any of these approaches do not make the debtor settle the account then the creditor will must consider what move to take next. If the creditor has been in the position of late payment of bills previously they may well have evolved a procedure for managing it and so would possibly just go ahead and take that course of action. If however, this is the first occasion, or possibly they had been unsuccessful in previous debt collection situations, they would be advised to investigate their strategy.

These mainly boil down to three; speak with a solicitor, or a debt collection firm and thirdly, search for some debt collection software and undertake 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 payment quickly. Their charges might be for the total number of debt collection letters, or possibly a percentage of the debt on collection.

The debt collection firm may be more difficult to select 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 contacting a debtor on the creditor’s behalf, since any behaviour that is confrontational may well reflect on the creditor and may give them a bad name with the business community. It is hoped that such bad debt collection agencies are few and far between, but if possible the creditor should try and find past customers of the Debt collection firm and see what they say. The charges for a debt collection firm are may be calculated as a percentage of the total debt owed and might have expenses in addition to this. Some may offer a no win – no fee deal, but it is unlikely that such a debt collection firm would not win, and it depends on what is classified as a win; part payment, 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 option would allow the creditor to have full control of the debt collection process, create their own Debt collection letters from instructions in the user guide or perhaps by using templates that come with the debt collection software. To get the best out of the debt collection software the creditor would have to set aside some resource to its operation, perhaps make it a part of a current employee’s job. For this in-house approach the important part is to understand how the debt collection process works, 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 option has a worthwhile cost saving in that any solicitor or debt collection firm would charge a fee per 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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