Why A Debt Collection Letter Could Be All You Need

When it comes to claiming money owed to you, you probably want it in your bank account as soon as possible. It’s understandable – you earnt it by providing products or services, and now it is time for you to receive what you earnt. But some customers might not be as forthcoming with payment, which can leave you in the position of needing to take action. At this stage, many businesses may jump straight to hiring a debt collector to chase the money for them, or to go straight to court. But in all honesty, that might be too much too soon. Instead, we recommend sending a simple letter first. This is called a letter before action, and it is often all you need to encourage clients to pay. But why?

It’s Less Hassle

To put it simply – chasing debts is a lot of work. Sending emails, re-attaching invoices, contacting multiple people within a department, making phone calls. It’s a lot of stress for the person doing the chasing, and can take valuable time away from the business itself. It can also cause a lot of frustration, contempt and even anger towards the debtor – which will then impact not only the way you approach them in future, but morale.

But if you send a letter – one on the headed paper of a debt collector or a solicitor – you only have to do one thing. Most solicitors or debt collectors will be happy to draft such a letter for you for a small fee, leaving you free to carry on running your business as usual. Because the correspondence is coming from a third party (one with legal standing at that), your debtor is much more likely to take it seriously. It’s a quick and easy way to help you maintain your business relationship with your debtor, but still recover the money you’re legally owned.

It Invokes Action

If you’ve ever had to chase a debt before, then chances are you’re aware of how difficult it can be to get responses. Many clients would rather not respond to you at all than speak openly, whether with malicious intent or not. Indeed, we’ve come across businesses who have waited for months to receive payment from late invoices, or who have debtors who will agree to a payment plan and then deviate from it. But sending a letter before action is the perfect way to spark action in even the most difficult clients. As we touched on above, receiving a letter from another entity with legal power to pursue the matter evokes action in the debtor 9 times out of 10. Indeed, in some cases we have found that debtors intentionally wait until they receive an LBA from a solicitor or debt collector before they make payment, thus invoking them to take action. This shows how much the service is respected within business practices, and how seriously debtors take such a simple.

If payment still isn’t forthcoming, you can get tougher by laying out a set date by which payment must be made otherwise legal action may be the result. Usually, payment within seven days is a more than reasonable demand, giving the client time to read the letter and act upon it.

At Debtcol, we are always happy to help businesses recover money owed to them. The way we go about this often depends on the circumstances around the debt, but often the first place we start is with a letter before action. This is an incredibly effective method, and allows your business to keep a good relationship with the client during the recovery process. Once the money is paid, we can work with you to put policies in place to ensure late payments become a thing of the past.

If you would like to know more, just get in touch with the team today.