When Does Credit Control Become Debt Recovery?

If we are to make the assumption that a business actually has a credit and risk policy, even the small ones need these, by implementing them whilst small they can be adjusted as the business grows making them an integral part of the business: then we can assume the credit control process will have within it an escalating chase cycle for debts that have not paid after seven days past the due date.

A business may vary the escalation process, some will have very short timescales and escalate matters quickly others will perhaps be more forgiving but by no means be complacent. By having such a process, it is much less likely that a late paying customer will be allowed to keep drifting further overdue and making empty promises to pay.

Whilst the process is in place and the chase cycle is being followed it technically remains within credit control, however it is important to understand where you draw the line, what is the cut off point in your business? Ideally no more than two reminders should be sent and at least one call to ascertain the reason for none payment, on the third reminder the Pre Action Protocols should be coming into play, depending on whether your customer is a Consumer, Sole Trader, Partnership or Limited Company some require seven day demand letters and others thirty days.

It is at this point that the account moves into debt recovery, unless you fully understand the court process do not use Money Claims on Line where the amounts are significant and by that I mean enough for you to have to think about the issue fee, can you afford to lose it ? There are several things to think about.

Referring the matter to a reputable recovery firm removes several of the issues that regularly arise when you try it for yourself, not applying the late payment interest or charges or issuing against the wrong party are all too common.

If you struggle with Credit Control in your business, perhaps you do not have a process or find you are constantly trying to get customers to pay then talk to us here at ICM let us help you at costs your business can afford.