Recent reports in the press that banks may be looking to use third parties to collect debts to collect Bounce Back Loans (BBLs) that are going “bad” raise a number of important issues.
Debt collection agencies have always helped banks collect non-performing loans, credit card debts, mortgages, etc. What is new, perhaps, is the tone in which the story is told, and that seeking professional help is a sensible step for the banks and the government to protect what is, in many ways. regards, the public treasury.
Certainly, whether directly or indirectly, the availability of credit affects us all, and we should applaud those who take steps to find the right balance. Banks fear that they will be “overwhelmed” with the task and are, of course, concerned with protecting their reputation. They are also concerned about the growing blurring of the lines between personal and business debt, and the growing emphasis on vulnerability. This is precisely why expert help is needed.
> See also: Almost Two-Thirds of Bounce Back Loans Could Go Wrong, Government Says
How to choose a collection agency
Opening this debate raises another important question, especially for small businesses and business owners: how to collect overdue debts and, in particular, who to go to when all their efforts have been exhausted.
Many small businesses are understandably reluctant to take action that could jeopardize a future relationship, especially in these unprecedented times. This is why the first step in choosing a collection agency is to only work with those who are members of the Credit Services Association (CSA).
Collection agencies that are members of the CSA already act on behalf of almost all major financial institutions and the public sector in the collection of “consumer” debts. But its members also manage more than 750,000 commercial accounts. Collectively, they collect over £ 400million each year, including on behalf of many small businesses.
By engaging a CSA member, you will know that they are not only following the CSA code of practice, but also responsible advice on how to collect debt during this difficult time. You can be assured that your client will be treated fairly and demonstrate the appropriate tolerance where necessary.
Collection companies take the client’s situation into account and are trained in empathy and flexibility. This allows them to easily adapt to give clients the appropriate periods of respite or to negotiate more time to pay or agree to an affordable settlement. It also means that they can direct clients to organizations that can provide them with additional free advice if they need it. Importantly, if customers let them know that they are getting advice, they will make sure to give them the time to do so.
> See also: Reminder of your debts and continuation of late payments
Why a customer did not pay
There can be a number of reasons a customer hasn’t paid. Some customers want to pay but cannot; some may have other reasons. A client may not pay, for example, because they have had to put their staff on leave or are still waiting for a loan to be granted, in which case the issue is timing. However, there may be no such reason for a debt not to be settled. In these situations, a CSA member will re-identify the problem and negotiate an appropriate arrangement to their client’s satisfaction.
No win, no cost
The main objective is to achieve positive results, to secure payments where payments are possible, and to provide help and support where such support is clearly needed. Working with a CSA member will give you clarity in the service they will provide and transparency about the costs you can expect. Many operate on a ‘no win, no charge’ basis (assuming no legal action is required) and charge a commission only on the money recovered, so in many ways you don’t. have nothing to lose. The recommendation is important: talk to other companies that use the service of the debt collection agency and learn from their experience. It is often advisable to work with an agency with specific industry expertise, who understands the nuances of your job, and what is considered “normal”. Often, you will find that the mere suggestion of a third party intervention is enough for a customer to settle what is unpaid.
“Make sure that the hard work that you have already put into your business is paid for”
The general advice for when an invoice is overdue and overdue is not to wait. While new income may be harder to come by right now, it’s important to make sure that the hard work you’ve already put into your business gets paid off. CSA members will work with you as an extension of your business, to protect your reputation. While it’s perfectly natural for a business to fear that bringing in a third party could end up losing a customer, it’s also worth noting that a customer who doesn’t pay may not really be a worthy customer. be kept. !
So, don’t ignore unpaid debts and hire a professional to handle the collection process. By engaging with a CSA member, you will soon be assured that your business is in good hands.
Chris Leslie is Managing Director of the Credit Services Association
Further reading on debt collection
How to hunt debt and get paid