When a small company has submitted their invoice for work done or products supplied to a larger company and then realise that it has not been settled after the agreed last settlement date, they might wonder if there is something in the law that can help them. For business to business debts such as this, there is the “Late Payment of Commercial Debts (Interest) Act 2002”, which shows single payments and daily interest that the small company is allowed to charge on the unpaid debt. This law is only applied when the contract, agreed between both firms, does not include a late settlement clause, if it does, then the law cannot be applied as well. The small company has the option of applying the charges or not however the large company cannot opt out of the late payment law.

If the small company wants to keep working or supplying products to the large company then before applying any charges they should inform the large company what they are proposing to do. In addition it is better to send a revised invoice detailing the charges being made so that it is clear what is being charged for. If applying[/spin] the law does not prompt settlement by the large company then the small company might see it as appropriate to begin Debt collection proceedings. This can be done by several ways; a Debt collection organisation, which has expeience in commercial Debt collection, or a solicitor with similar talent, or even to buy of a Debt collection software package and keep the Debt collection procedure in-house.

Taking on the Debt collection procedure themselves can not only save revenue, but also allow the small company to control the Debt collection procedure. To allow them to do this professionally the Debt collection software should include a manual which explains the Debt collection procedure in detail and most importantly, how to generate convincing Debt collection letters. The small company will also need to allow for adequate resources if this path is to work and so competent workers should be chosen, perhaps two or more so that there is support in the event or holidays, sickness or other absence. Computer literacy would be a key requirement and also a good standard of English in order to generate good quality Debt collection letters. The Debt collection software should be able to direct the user along the Debt collection procedure and display to them how to generate Debt collection letters appropriate for different stages of the procedure. A good way of doing this would be to supply a suite of samples of Debt collection letters so that the user has a starting point from which they can edit the actual Debt collection letters to suit the large company details, which will be essential if the Debt collection letters are to be taken seriously.

A really good benefit of Debt collection software is that once obtained it can be reused for any debts that come up in the future and the small company only has to pay for printer consumables, stationery and postal costs. It the small company was to use a solicitor or Debt collection organisation then they might well be required to pay 10% or more of the debt for the service, but this would be charged for any future debts as well, so making these rather expensive strategies.