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Small Business Owner’s Guide to Debt Collection

Any small business owner will know just how stressful it is when clients or customers neglect to pay on time, or, in some cases, don’t pay at all.  After all, a small business needs a steady cash flow in order to stay in business and succeed.  Britain is a nation of small business owners, with SMEs (small to medium enterprises) accounting for more than 99% of all private sector businesses here in the UK.  Indeed, our economy depends heavily on small businesses with their combined annual turnover of £2 trillion, more than half (62%) of all private sector turnover.  However, these small businesses don’t have the same resources as larger companies that employ financial experts to take care of their business finances. 

When any small business owner is faced with non-paying customers, solving the issue can often seem time-consuming and, in many cases (especially when the sums involved are relatively small), not worth the effort.  There are several reasons why customers don’t pay their debts:

  • They are purposely not paying in order to avoid their financial responsibilities towards you
  • They are unhappy with the goods or services you provided
  • They are facing financial difficulties themselves and cannot afford to make the payment

In cases where your customer is experiencing financial difficulties, they probably feel bad about defaulting on payment, but just don’t have the money at present.  Contact these customers and try to work out a payment plan that will be mutually acceptable, perhaps spreading out the payment over a longer term, with smaller instalments.   This is likely to ensure that the business relationship endures in the long term, so it’s a win-win situation for both parties.

If they are unhappy with the goods or services provided, then contact the customer and see if there is any action you can take to “put things right”.  This could be a replacement of goods, a repeat of services, or a discount.  Again, you want to make sure your customers are happy with the goods or services you supply as this is vital for your business reputation.

In cases where the customer is just downright neglecting to pay, then it could be time to call in a professional debt collection company with experience of securing payments in such cases.  Make sure that you’ve kept a record of all communications (letters, emails, phone calls, etc.) that can be used as evidence should the case end up in court.

This may be relatively straightforward when dealing with customers based in the UK, but what about overseas customers who neglect to pay?  There are debt collection international debt recovery firms that specialise in dealing with non-payment from overseas customers.  They have the expertise necessary to negotiate the legal processes in countries in Europe and the rest of the world and will advise you on the best way forward when it comes to recovering monies owed to your business.  If you’re concerned about the collection agency fees, then look for a company that offers their services on a no-win, no-fee basis.  This doesn’t just protect you from wasting more money on chasing the debt, it also gives you an added level of confidence in their services.  After all, unless they are pretty sure that they can successfully recover the money owed to you, they are unlikely to work on a contingency basis in this way.