The step-by-step guide to debt collection

For any business, it is necessary to be paid on time. Late payments and customers trying to avoid paying for your goods or services can cost your business and have long-lasting and damaging impacts on your cash flow.

Debt collection is a profession in its own right that requires diplomacy, empathy, strategy and experience. Carrying out the recovery yourself is time-consuming. This time could be used to develop your business, search for new business opportunities or improve your services to customers who pay you a fortune.

To make informed collection decisions and successfully pursue your debtors, the data you rely on must be current and complete. We also recommend that you work with an experienced debt collection company, both for their sound advice and for monitoring your bad payers. It is not always easy to know what steps to take to obtain payment of your debt under the best conditions.

Below you will find the recommended steps for collecting your invoices.

1. Billing and payment tracking

Before talking about collection, it is important to talk about billing. Although often this step may not be your cup of tea, invoice your goods and services quickly and regularly. Then, check your bill payments every week. Late payments are unfortunately common, but there are solutions to speed up payments. If, despite this, you are not paid or only partially paid, you must begin the recovery process without delay.

2. Sending a payment reminder

If you notice that the payment deadline has passed and your invoice is still not honored, you should ideally send a reminder. You can send a polite notification, but it should be direct. You can send it by post or by email. Sometimes, for certain regular customers who have always honored their invoices or whose turnover is important for your business, you can contact them by telephone beforehand.

Some accounting programs allow you to send a reminder to your debtors. It is also possible to outsource the sending of reminders to specialized companies. The free MindYourBills app allows you to encode your invoices and send one or two payment reminder emails to your debtors. You can also classify your invoices as paid, unrecoverable or forward them to the debt collection company with one click.

3. Transferring unpaid invoices to the collection company

Your callback went unanswered? It's time to hand over to another speaker. Unpaid invoices can easily be forwarded to a third party. To take charge of your unpaid invoices, a collection company must have, in addition to a formal contract between you and their services, complete information on your unpaid debts. If you sent your reminder with the MindYourBills app, the information will be sent to them with one click. If you have opted for other reminder methods, be sure to provide as much information as possible about both your debtors and the invoices due. Once the information has been received, the collection company will encode a file that you can follow, often online, as the amicable and legal recovery progresses.

4. Amicable debt recovery

Before any other procedure, amicable recovery involves sending a formal notice to your debtor. This is a mandatory letter in the majority of countries in the European Union, and even the world. After sending this official letter and after the obligatory period left for the debtor to react, the amicable recovery will continue. Each collection company uses its own methods based on its experience and ethics. INTERNATIONAL RECOVER COMPANY®, for example, uses postal mail and text messages, calls debtors and sends debt collectors. The objective is to contact the debtor, obtain payment or a reasonable settlement plan for the various parties involved. Among their values, we find respect for the laws but also for private life and human dignity. In the majority of cases, these steps will pay off and you will get your money back.

5. Judicial recovery

Unfortunately, sometimes it is impossible to find an amicable solution (insolvency, disappearance, refusal to pay, etc.). The collection company will then close the amicable recovery, either by providing you with a certificate of irrecoverability, or by offering you legal follow-up. The agency can often serve as an intermediary and will contact, with your agreement, a lawyer and then a bailiff for the different stages ranging from summons to possible seizure.

INTERNATIONAL RECOVER COMPANY® has been working alongside independents and businesses since 1993. For advice when drafting your general conditions or your purchase orders, for sending your reminders or taking care of your unpaid debts, do do not hesitate to Contact us.