Whilst some customers will respond to the debt recovery techniques employed by your business or a commercial debt collection agency, others need an even firmer approach to persuade them to settle outstanding invoices. This is where legal proceedings can have the best impact.
Here are 6 reasons why you should outsource your debts to a legal practice:
- Time Savings
This is the most obvious one. As a Financial or Credit Controller, you may find an increasing amount of your time is taken up collecting debts, when you could be concentrating on credit control and prevention of bad debt. If the debt is over $5,000.00 and you know the location of the debtor, it’s worth sending directly to a lawyer. Often a lawyer can also recover some of your legal fees and even interest from the date the debt became overdue.
- Higher Success Rate
It makes sense that a debt collection professional will have a higher recovery rate that you could get internally. In addition to their in-depth experience, agencies also have the tools in place to track and monitor the progress of all of your accounts without having to establish new procedures like you might have to by doing it on your own.
- Sending a message
Going straight to legal sends a strong message to your client that you are serious about payment. If they are an ongoing client, this will send a strong message to them not to be late in payment again. You will also send a wider message to the people in your industry, that you are serious about credit control and account receivable. You and your company will eventually be respected for your very tight controls over credit and the financial side of the business.
- Professional Opinion
A lot of the time, you may be just guessing about the likelihood of recovery against a particular company or individual. Debt recovery may not be your forte. Debt recovery litigation experts like ADC Legal-Litigation Lawyers, do this sort of things all day every day. We are experts in this field, so we are going to be able to very quickly sort the good from the bad. We may decide, for instance ,to send a letter before issuing proceedings in court. Often this is all the action that is needed to get the customer to pay, or at least open a dialogue about the debt with the customer. It is important to have a litigation lawyer evaluate each individual debt and pick the course of action that will best maximise its recovery. Sometimes we even recommend to write off the debt instead, say if we investigate and find the debtor company is bankrupt or in liquidation.
- Someone Else to Handle Disputes
This can be one of the most time-consuming parts of the recovery process. Quite often, the debtor company will dispute either the amount, or the good or services provided, or both. We handle all disputes matters by investigating the whole issue, with all the stakeholders that may be involved. Sometimes this process takes months, so we have a diary process that can look after these cases.
The legal system can be complex and, with a lot of legal jargon to understand, can be off-putting for many businesses. By employing a good company to start the legal proceedings on your behalf you will have the added benefit of experts that can offer sound, practical support.