It might be the first option we think about if we don’t hear back from clients, right? However, calling the big guns and hoping that the threat from that alone will make your clients pay might get the results you want, but will they stay with you afterwards?
There is often a stigma attached to debt collectors which can turn clients off paying even more, despite debt recovery being a continuation of credit control. Deciding whether to choose a debt collector or a credit controller is important and will differ in certain situations.
An agency like CTCC Solutions will help you keep control of your cashflow, be on top of invoicing, and chasing those late payments. Some companies often have an inhouse team that does this job. However, for those businesses that may not have those resources, outsourcing this to a credit control agency will help with freeing up time to run your business.
Credit Control is the practice of keeping the cash flowing in when payment is due. Finding a routine that works around issuing invoices and payments from clients is vital to keeping a business afloat. Although providing monthly reminders of payment may work with many clients, there will be some that will end up not paying.
A good credit controller will be able to work out the reasons behind why your clients aren’t paying. Finding out the causes behind late payments could help you make the decision on whether you want to work with that client in the future or change working terms.
Debt recovery on the other hand can be perceived as a little more forceful. In addition to calling and emailing clients, this process goes straight into recovering the owed payment. Once the debt collection process has started, enforcement tactics will begin, from imposing interest for delayed payment to paying for the costs of the process and of course CCJ’s (County Court Judgements). This can ruin any rapport that you have built with a client.
When to make this decision is key.
Often the mention of debt collection can turn things sour with a client. Opting for a credit control agency could be the difference between keeping a customer and losing one.
Despite all this, debt recovery services do have their place in this whole process. Once all avenues have been exhausted, it may be worth using this service as a final resort to push clients to pay.
However, it’s often a cheaper and more effective option in the long run to opt for credit control services as it will not only help you keep up with the cost of your business but also manage customers and any potential cashflow problems that may occur.
With an effective credit control process, you can avoid having to go to debt recovery.