Recover debts to keep the money flowing.

5 Debt Recovery Tips to Collect Outstanding Debt Quickly – Marshall Freeman  Blog

Lending money is usually a kind act that turns into a painful situation; especially if it is about collecting money borrowed from friends or close people; That’s why you need to be clear about who somebody owes me money

Staying on top of cash flow is the key to success in any business. Recovering debt quickly and easily is important in keeping the money flowing. Occasionally, you’ll have customers you need help paying the bills for. When debt becomes extremely problematic, a debt collection company can help you recover the debt.

Often all it takes is a standard, stringent demand letter for payment of outstanding debts addressed to the company to encourage its sluggish customer to pay – it’s an easy and cost-effective first step.

As a business, successfully recovering outstanding debts can be critical to your cash flow and the smooth running of your organization. A pre-action debt recovery letter will notify the business that owes you money of your intention to pursue the debt through legal action and is usually the first stage of the debt recovery process.

What is the letter before the action?

A letter before action demanding payment from the debtor within 14 days if no court action is to be initiated. The pre-action protocol, the court’s guide to pre-action measures, provides that the debtor must be given a reasonable time to respond and that, as a general rule, 14 days will be considered a reasonable time. Practice directions containing protocols can be found in pre-action behavior and protocols. This protocol affects business-to-business debt unless the debtor is a sole trader.

Failure to comply with the protocol may result in costly consequences if claims are disputed.

The benefits of sending debentures before acting

When it comes to debt recovery, a pre-action attorney’s letter effectively communicates how seriously you take the situation. Often, it can be the only action needed to get the debt paid off.

You can send a debt recovery letter before action from your business in person. Still, those letters tend to carry more weight and have a better outcome when a debt recovery attorney sends them on behalf of your business. A letter before action is a proper protocol for businesses claiming debts from other businesses but not individuals. See below for a new pre-action protocol for businesses looking to recover debt from individuals (including sole traders).

Once you are clear about the existence of the debt and the amount, as well as the documentation that serves as evidence, you can use a debt collector company dedicated to debt collection management which will generally take the following steps:

  • Debt analysis, amount, maturity, contract data, and documentation of where it came from (budget) and debtor data.
  • Study the debtor’s solvency, that is, his ability to fulfill debts. This data can be consulted in Asnef, Trade Registry, or Property Registry.
  • They will contact the debtor, and they can initially use the telephone. In this first contact, they will try to find out what the debt is and also try to get a commitment to pay from the debtor, agreeing on a date and method of payment.
  • If the debtor lacks liquidity, they may be offered (with your consent as the creditor) debt reduction on the condition that they repay as soon as possible. This agreement must include a form of payment and a deferred amount to be paid monthly. Likewise, legal force must be documented in writing, with the creditor’s and debtor’s signatures, thus binding on both parties, and if the debtor does not pay, the creditor can sue him in court proceedings.
  • Suppose the debtor does not pay by the scheduled date. In that case, they can send a burofax setting a new date and discuss the possibility of initiating legal action if the non-payment continues.

With all these procedures, you will save a lot of time and entrust debt collection to a dedicated attorney who will make every effort to achieve collection.

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