Why are business owners writing off debt?

According to the Credit Strategy Magazine, relating to writing off debt, “the value of unpaid invoices written-off by individual SME’s has jumped to £20,400 for the second quarter of this year. That’s an increase of more than 70 percent.”

And

The small business guide says that, “typical UK micro-businesses write off an average of £1,804 in unpaid invoices per year.

With five million micro-businesses in the UK this equates to a total of over £9 billion written off in unpaid invoices last year.”

I am going to tell you exactly why you don’t need to be writing off debt.

You have nothing to lose by letting a “No Win No Fee” debt collection agency ethically collect the money for you. If they don’t get it, you have not lost anything. Just make sure that there are no upfront “admin” fees to pay first.

We feel so strongly about people being paid for their work, that we offer to collect debts under £450!

If you have done the work or sold the product to the customers satisfaction, you should be paid for it!

Only yesterday we received a referral from someone who was going to simply write off a debt because the customer just never got back to them. We obtained the overdue monies, plus interest and a late payment fee within 48 hours!

Many business owners simply do not have the time to be chasing debts. Whilst others said that they didn’t want to risk losing their customer by chasing them for a payment.

Should you still want to keep your customer and if you are worried about damaging the relationship you have with them, by using a “third party” debt collection agency, separating yourself from the customer, can make the process more effective. Especially when the debt collection company has customer retention as their first and foremost goal.

There is too much hard work going unrewarded!

The facts and figures above demonstrate the financial cost of poor credit control in a busy business owner’s life. It does not have to be this way.

What you need to consider before writing off an unpaid invoice:

  • Under The Limitation Act 1980 a debt can still be chased for collection for up to 6 years. Is the debt over 6 years old?
  • Can you solemnly declare that you have exhausted all avenues to collect the debt? Have you sent late payment letters, emails & called the customer. Did you try paying them a visit to ask professionally and politely for the money owed? Have you contacted a debt collection agency?
  • Is there a third party involved with the debt, that you might be able to use to collect your payment?
  • If there is a dispute have you tried mediation, compromise or negotiation with the debtor?

When a debt should be written off:

  • When the company has gone into liquidation find out who the Liquidators are and ask for your name to be added to the creditors list.
  • If you have tried a debt collection agency “no win no fee” and they have been unable to collect.
  • If you have been unable to trace any whereabouts, name, address, email of your debtor and you feel you have exhausted every avenue. Leave them on your ledger for up to six years, just in case they do show up somewhere. You never know.

So in future before writing off debts owed to you for your service, product and hard work, please consider the above factors before doing so.

If you need to talk to someone who can advise you, call Franklin James Credit Management on 01494 422 742 or email info@fj-creditmanagement.co.uk