The answer depends on the terms of trade. If terms are ‘pay within 14 days’ and the debtor hasn’t paid, let’s say by 25 days, we would be issuing a notice. It’s easier to collect on a fresh debt.
Here’s what generally happens….
- The client sends the invoice due within 14 days.
- The invoice is overdue a week, they call the debtor who says, “oh yeah I’ll make the payment”, but they never do.
- They call them again a week later (because they are super busy and don’t get around to it). The debtor says, “oh sorry, been busy, I’ll make the payment” and of course again, they don’t.
- By now, the debt is overdue a month or more and they stop answering the phone calls.
Next stage:
The businesses sends the debtor a letter basically saying, you now need to contact our office within 24 hours otherwise we’ll have to escalate this to our outside debt collection agency.
The response…. crickets…
At this stage the business owner is flat out, feels bad and doesn’t “want to hassle them” anymore, they are worried about cash flow, so they call us in.
We find most of these debtors have never had to deal with a collection agency before so when they receive a letter from us, the collection agency, it’s a reality check and a bit of an “oh crap” moment and they tend to pay. If they don’t, we follow it up and if we have to go legal, we’ll take the risk, instead of the client.
Unfortunately, we see too many business owners end up leaving the debt for too long and then simply write it off and the serial debtors get away with it. It’s better to call us or simply have us recovering your debts on an ongoing basis as we get the debt paid and it works out better value than losing the money and the stress of low cash flow, in the process.
Contact us today to discuss how we can help.
