It can be a difficult decision to decide when to instruct a debt recovery company. However, you need to remember that the older a debt is the harder it becomes to recover.
Our clients don’t want to put pressure on their customers, but, on the other hand, they can’t leave invoices to build up. Generally, our advice is to not allow invoices to be more than 90 days late before taking further action.
Each individual situation will differ, depending on the relationship you have with your customer and their previous payment history. We can provide help with your unpaid invoices however old they are.
Commercial debt recovery
Clients are always asking us how they can get overdue payments from clients. The first step in the process is to instruct a debt recovery company, such as ourselves. This takes the stress away from chasing clients and shows them that you are taking decisive action.
There are measures you can put in place before instructing a debt collection agency. This includes having a good invoicing system and limiting the number of unpaid invoices.
However, even with an effective accounting process, there are times when it becomes necessary to outsource your debt recovery.
Why should you use a debt recovery agency?
This can be because you don’t have the necessary internal resources to manage it efficiently. Smaller businesses, in particular, can suffer from a lack of cash flow when invoices aren’t paid promptly. Spending time chasing unpaid invoices takes them away from working on other aspects of the business. Instructing a debt recovery agency enables them to concentrate on growing the company, whilst still maintaining a healthy cash flow.
Another reason why companies choose to outsource their debts to a collection agency is that their efforts to collect have failed. Where they’ve made repeated attempts to contact the debtor and collect the debt, sometimes a third party can have more success. A specialised debt recovery company will have extensive experience in dealing with these situations. Additionally, sometimes just the use of an outside agency can spur the customer on to pay.
The best time to use a debt recovery company
There is no exact moment when you should start the debt collection process for unpaid invoices. It is important to remember, though, that leaving it too late could mean you receive no payment. We have had cases in the past where clients have chased unpaid invoices and find the company has gone into administration.
At this point, you are unlikely to get any of your money back or it will be a relatively small percentage. If you think that a client is in financial difficulties, it’s always best to start recovering their debt as soon as possible.
Using CEA Ltd to recover your debts
It doesn’t matter how many unpaid invoices you have and how large or small they are, at CEA Limited we can help you to recover them. Contact our account management team to discuss your requirements. For B2B debts (where the debtor is a limited company, plc or LLP we don’t charge the creditor any fees at the pre-court stage).