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How to avoid the risks of upfront payment for recovering a debt
This recent client highlights an important point which is often overlooked when a company requires assistance with recovering a payment from a debtor. Our client had tried collecting a payment owed to them using a debt recovery solicitor firm who offered sending a free letter to the debtor.
The debtor did not respond to the letter.
The solicitors suggested entering a claim. Which they offered to do at an hourly rate plus upfront court fees.
Our client felt that not enough had been done in terms of attempting to contact the debtor and resolve the matter, most of all they did not want to risk throwing good money after bad for a relatively small amount owed. The debtor had proved to be very stubborn so far, and would likely dispute any claim, causing delays and more fees to be paid upfront to proceed with any claim.
Another quick search led our client to discover our no win – no fee business debt recovery service and they got in touch with us looking for options. Even though we prefer dealing with debtors from the beginning of any collection attempt, we are often contacted by companies who have tried a free ‘Letter Before Action’ offered by solicitors. We are contacted when that approach fails and our client finds that they are now faced with paying upfront to proceed, or that their debtor involves a solicitor too, and that can mean legal bills for letters to be sent back and forth, if they choose to proceed with the collection attempt.
We agreed to work on the debt for this client without any upfront payment. Our no win – no fee service involves debt recovery staff proactively working on each debt we process, not only are a series of letters and emails used, our staff find the way to get the debtor speaking to them on the phone. Using our skills we are able to resolve the vast majority of debts on behalf of our client without any need for legal action. We utilise the late payment act to the full extent permissible, meaning that added additional late payment fees and interest to the amount payable by the debtor, usually is enough to cover our commission fee, for successful collection.
We resolved this particular matter within 15 working days, without taking any legal action. Our client paid our commission for winning and were left with >100% payment of the overdue invoice amount. Please see the actual figures below:
£2331 Amount Owed
£2649 Amount collected with interest and late payment fees
-£317.88 Win commission fee 12%
£2331.12 Received by client
Do you require assistance collecting a business debt? Contact us