Debt Recovery

Getting paid for work you have completed in the vehicle breakdown/recovery industry can become quite daunting, creating a negative attitude from the outset for many, but it has to be viewed as all part and parcel of the running of your business, it must be approached in a business-like manner, thorough, intense but often basic.  The further you have to go to obtain payment the more the process may change from country to country.

Preparation of the invoice is far more important than some businesses recognise.  You will need to be sure that you have prepared an invoice that is correct i.e. date, address, figures, payment terms and conditions with enough detail of the work completed to justify the charges, even if there is need for supplementary paperwork, most of all it will need to stand the test of 'fair and reasonable', this will all aid in a prompt payment in most cases.  That is of course providing you have paid due diligence to credit worthiness in the first place, because of course it gets a little tougher when you have already completed the work but often do not have lien over the property in question.

Failure to receive payment according to your terms and conditions should be addressed immediately; this confirms your company's professionalism, an image that will generally register with a debtor, it sends out an early warning of your integrity and intention.  The outstanding matter should be addressed with a polite letter to the person you have clearly ascertained as responsible for authorising the payment.  Often time is spent on the telephone that can prove confrontational and of which there is no record, on too many occasions involving personnel who do not have the authorisation anyway.  The letter should be clear and concise keeping the focus on the invoice and the payment terms and conditions, concluding with an option for the debtor to dispute the invoice content and provide any reason why the invoice should not be paid.

You should allow a reasonable time for a response, generally acepted as 2 to 3 weeks, this will allow for out of office travel, holidays or sickness.  Naturally the next action will depend upon the contents of the response.  A second letter should also be polite but introduce content that is firm and provides very clearly a time when further action will take place at the same time still offering an opportunity for the debtor to question the invoice content.  Maybe you would consider introducing the option to claim Statutory interest?  Whatever your decision or course of action, make sure that you adhere to any timescales you have stated; otherwise this will indicate a weakness on your part.  Solicitor and court action may be next but as a last resort.  If court action is the case you may need to step into the shoes of the debtor standing in court, are you absolutely sure the magistrate will have enough fact to decide your claim is fair and reasonable, and does the debtor have the capacity to pay?

 

25.8.09