Debt Enforcement – How to Make Sure You Collect a Debt

Debt Enforcement – How to Make Sure You Collect a Debt

Every business in the UK has to deal with non-paying clients.

For most, clients are the primary source of income. Issues involving non-paying clients need to be resolved immediately.

If left unchecked, a business’s cash flow can be dramatically affected.

Many have some kind of credit-control process in place.

Office-based accounts teams regularly spend a lot of time chasing unpaid debts.

Many organisations like to do this ‘in-house’. They choose to do this as the perception is that it is more cost-effective.

Whilst they are doing this, normal tasks cannot be worked on. This can often make the debt begin to cost more in both time and money.

As well as this, the outcome of independently working on the debt collection task is not guaranteed.

Typically, the business in question has very few options of how to enforce a debt.

For example, if they have sold goods or provided services already, there is little they can do except deny any future trade.

One option often used is to take the legal route through a court.

Whilst this can be effective over time, it is usually a long, drawn-out process that is extremely expensive.

As well as this, there is no guarantee of success. Many companies end this process having spent thousands of pounds.

The only outcome is that they are eligible to apply for a County Court Judgement (CCJ). This will then require even more time and money to process.

How to Enforce Payment of a Debt

One of the best ways to enforce a debt is to try and prevent any in the first place.

Having a robust and clear set of terms and conditions is an excellent measure every business should have in place.

As well as this, payment terms should be discussed before an agreement is made. These terms should outline the client’s obligation to pay you.

As well as this, it is common to include late-payment charges in payment terms. This usually has the effect of giving the client an incentive to pay you on time.

Despite putting these preventative steps in place, some clients will go to the ends of the earth to avoid paying you.

In cases like this, having a way to enforce a debt is critical. Without it, there will be no incentive for a client to pay.

If you already have a CCJ against your client, then this is a good way to enforce a debt.

With this, the debtor will have to respond to or pay the debt or else to face court action.

If a debtor has a CCJ against them, it will be on their credit file for six years.

During this time creditors will be able to see this, and it may make it harder for the debtor to take out further credit.

How Long is a Debt Enforceable?

Sometimes, even a CCJ is not enough, and the debtor will seek to avoid paying no matter what.

Others simply ignore it.

Sometimes circumstances dictate that a debt will not be chased for a long period of time.

Those who are owed money become concerned that the debt cannot be collected anymore.

For business debts in England, there is a time-period limitation for how long a debt can be enforced.

This time period is 6 years.

However, if the debtor pays into or acknowledges the debt within that period, it resets to that point.

How to Enforce a Debt – Instruct a Professional Debt Collection Agency

If your business is considering debt enforcement options, the best choice is to instruct a professional debt collection agency.

A debt collection agency will be able to not only enforce your debt but collect it in a timely manner at a low cost.

They will also have a team of highly trained High Court Enforcement officers.

Each agent will work diligently to ensure that your debt is collected.

The manner in which the debt is collected is of critical importance. This is especially true for businesses.

If the collections process is handled poorly then a working relationship with that client will be jeopardised…

…this means future opportunities will most likely not be available!

Choosing the best debt collection agency is a critical decision for any managing director.

When searching for an agency, it is important to research each option carefully.

The one you choose will effectively act as an ambassador for your organisation.

The best agencies to look into are those with a well-established history. As well as this, accreditations and positive client reviews are excellent things to look out for.

Federal Management is one of the UK’s longest established professional debt collection agencies.

Specialising in the recovery of commercial debt, we are the UK’s best-rated business recovery agency.

We are regulated by the Financial Conduct Authority (FCA). This means that our collection and enforcement officers operate at the highest levels of professionalism. This also provides peace of mind for our clients.

Federal Management also has an industry-leading debt recovery rate of 90%. This is on all undisputed business debts.

For help with enforcing a commercial debt, speak to one of our friendly debt collection experts today.

Debt Enforcement – Frequently Asked Questions

Can Overseas Debt Be Enforced in The Uk?

Absolutely. If you are owed money from someone in another country, a professional debt collection agency can help you. Federal Management is the UK’s leading international debt collection agency. We apply the same level of professionalism and expertise for all debt collection cases.

How Long is a Debt Enforceable?

In England, the limitation period for enforcing a debt is six years. After this time period is exceeded, the debt is known as ‘statute barred’. However, if the debtor acknowledges or pays any of the debt within that time period, it is restarted from that date.

What Are Your Commission Rates?

Our Commission rates start from as little as 6% upwards dependant on the value, volume and complexity of the debts.

Do You Just Deal With B2B Debt Collection?

We are the UK’s leading Business Debt Collection specialists but can also help with Personal Debt Recovery.

What Is Your Recovery Rate?

We collect as much as 90% on undisputed Business debts.

Posted on March 29, 2021