How To Make Bad Debts Better in Poor Paying Industries
Debt collection can be difficult but in some cases, can be easier than others. Recent research conducted by the Chartered Institute of Credit Management (CICM) shows us what industries are currently the poorest payers and what industries are currently the promptest payers – this could come in very useful for businesses who want to expand their reach – targeting industries known for the prompt payment is a good plan to make sure that you get paid faster.
CICM found that the following industries are currently the most difficult to get paid (with number one being the worse and so on):
1. International bodies
2. Water and waste
3. Financial and insurance
5. Public administration
On the other hand, research further found that prompt payers fell into the following industries (with one being the best and so on):
3. IT and Comms
4. Real Estate
5. Agriculture, Forestry and Fishing
TURNING BAD DEBTS INTO GOOD ONES
For companies in these industries, difficulty in getting paid can be frustrating. After a period of time and multiple requests for payment, a company may turn to a debt collection agency for assistance in recovering the debt from their debtor. This is one way of recovering your debts but you may only be able to go so far without a legal process to back up your efforts. This is why, taking the next step and going legal may be your only alternative.
The legal route of debt recovery can be a smile process and generally consists of four main stages. It is worth noting that you may not need to move through all four stages to get paid faster.
Step 1 – Demand Letter
The first step to take when utilising a debt recovery solicitor to recover your debt is for your solicitor to issue a demand letter. This letter will give the debtor 7 days to pay the debt or you will be forced to move one step further and issue legal proceedings. In some cases, the threat of legal proceedings may entice your debtor to pay within the 7 days or get in touch to negotiate a payment plan with you. This may be the end of your debt recover process if payment is received or a payment plan is agreed with the debtor.
Step 2 – Legal Action
If after 7 days the debtor has not paid or a payment plan is not agreed then your debt recovery solicitor can then issue legal proceeding against your debtor. In this case, the debtor may pay the debt before the case reaches court. This means that your debt recovery journey ends here.
If the debtor does not pay, or disputes the debt then the matter will move forward to Judgment.
Step 3 – Judgment
If your debtor has not responded to the legal proceedings issued then you move straight to judgment.
In cases where the debtor has defended the claim made against them, your debt recovery solicitor will take you through the process towards judgment. If judgment is passed in your favour then the debtor will be forced to pay the debt to you.
In some cases, the debtor may pay the debt to you in full. At this point once a judgment is passed and that will be the end of your debt recovery journey.
Step 4 – Enforcement
In cases where a debtor does not pay you immediately after judgment has been issued, there are some legal remedies that can be taken to help you get paid faster. Your debt recovery solicitor will write to the debtor seeking payment and advising that enforcement action will be taken if the debt is not paid within 14 days.
If after 14 days you have not been paid then there are a number of options available to you. Read more about these options here.
GET PAID FASTER
Getting paid faster means you have more cash flow and therefore fewer borrowings. Fewer borrowings for your business means your business is paying less interest. Your debtor is not getting the benefit of your money while you sustain the loss.
When it comes to industry-specific debt it is a good idea to engage a debt recovery specialist. This is so you are getting an expert service from a service provider knows how both industries work.
If you find that you are having trouble collecting your debt from your debtors feel free to contact Sarah Walsh, Carlisle Solicitors, on +35316533370 or email firstname.lastname@example.org and tell her about your debts – also you can visit www.carlislesolicitors.ie to find out more.